Public Power - July/August 2008 - (Page 37)

the investor-owned utility was brief. Public Service Co. of Colorado fell prey to the merger frenzy that enveloped the utility industry in the early 1990s. It was acquired first by Southwestern Public Service Co., which in turn was acquired by Northern States Power. The customers once served by Public Service Co. of Colorado now buy electricity from Xcel Energy. GranthamRichards left the company before the first merger closed. She was hired to be general manager of Farmington Electric Utility System. She found her return to the consumer-owned segment of the industry much to her liking. At the IOU, decisions were always driven by what would make shareholders happy. If customers happened to be happy at the same time, that was great, she said. But even if keeping customers happy held out better long-term prospects for shareholders, the IOU management was unwilling to disappoint shareholders in the short term. Now, the European lass is the 2008-09 chair of the board of the American Public Power Association. And a key part of her message for public power utilities is about the numbers. Her equation involves spending the money that would be invested in a new generating plant on energy efficiency first. A new combined-cycle gas power plant can be built for $1,250 a kilowatt. But if Farmington Electric Utility System gives that $1,250 to the city, or to a customer, to reduce demand for electricity, it is money better spent, she said. The Farmington City Council and Public Utility Commission adopted a policy last year to invest in conservation and efficiency first. “We’re looking at more than $1,250 because we are looking at long-term operating and maintenance expenses at the same time. If they keep that load off for 30 years, I can save 30 years’ worth of gas, water, chemicals and maintenance expenses.” Paradoxically, she’s also likely to invest in some $10,000 kilowatts— solar ones. That, she concedes, is for show. And the need for that kind of an extravagant show leads Grantham-Richards to her second message for APPA members during her year as board chair: People take electricity for granted, she said. “They turn on www.APPAnet.org that light switch and electricity is there.” They do not understand the financial implications of building a 100-MW solar power plant. “I don’t think we communicate well with our public,” she said. The coming climate change regulations will impact personal budgets in a big way. “We are looking at increased costs for food, fuels, energy. We need to communicate better about what is going to happen in the future, before it is here.” Farmington Electric Utility System serves 45,000 customers in a 1,700-squaremile area encompassing the city of But New Mexico’s San Juan Basin is declining and in another 10 to 15 years, the oil and gas industry may be gone. That presents a challenge for Farmington Electric. The community’s other economic presence is as a shopping Mecca for the Four Corners region—where New Mexico, Arizona, Colorado and Utah converge. “It is a delicate balance to make sure you are providing energy to your existing customers today at the most reasonable price, but taking in to consideration that 10 or 15 years from now, you may not have the need for all the resources you are building because the demand for electricity will go “We are looking at increased costs for food, fuels, energy. We need to communicate better about what is going to happen in the future, before it is here.” Farmington and its surroundings. Seven customers in the oil and gas industry account for 42 percent of the utility’s electric load. The utility has not increased its base rates since 1982, although a production cost adjustment clause introduces fluctuation into electricity costs. The utility has met all of its capital expansion needs with cash reserves. Its only outstanding debt, incurred in 1982, will be paid off in 2013. Those seven customers are important to Farmington Electric. Asked about the utility’s key accounts program, Grantham-Richards said she personally manages it. “I personally take care of those seven customers,” she said. “They have access to any staff they need to talk to; they don’t need to come through me. But I keep up with them. We meet with them and I like to take part in that. I think out of respect for them, for the amount of money they provide to us, they deserve to have access to me.” Farmington’s industrial customers have a 99 percent load factor. “When you are looking at building capacity, especially base load, those kind of customers are very valuable because they make your investment worthwhile.” down over time,” Grantham-Richards said. Shopping won’t fill the economic void that will be left when the oil and gas companies leave the San Juan Basin. Neither will call centers. Farmington officials hired an economic development consultant who advised city leaders to cultivate new jobs that will not reduce local per-capita income. The utility expects to start construction later this year on a $100 million gas-fired combined-cycle power plant. Down the road, that plant might provide one piece of the puzzle for Farmington’s economic future. The utility needs new capacity now to meet customer needs. When the oil and gas producers leave, the surplus power from the plant could be exported to markets outside of Farmington. For Grantham-Richards and Farmington Electric, the biggest challenge is balancing the need for additional resources with the knowledge that those customers will be gone before another two decades pass. “It is a delicate balance,” she said. But her accountant’s rigorous no-nonsense analysis of the situation at hand has served Grantham-Richards well for decades. There can be little doubt Farmington Electric will meet the challenge. ❚ JULY-AUGUST 2008 37 http://www.APPAnet.org

Table of Contents Feed for the Digital Edition of Public Power - July/August 2008

Public Power- July/August 2008 Contents Perspective 10 Questions Solar Energy Rising Sacramento's Solar Shares Gainesville Crowns a Conservation Idol By the Numbers Curbing Costs of Outages Reliability Green Energy Hometown Connections Customer Service Parting Shot

Public Power - July/August 2008

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