The key to reducing long-term costs and risks

 

Challenges

  1. Energy demand from EPUD customers has risen dramatically in recent years.
    EPUD customers now demand over 10 percent more power than they did in 2015. Factors behind the major increase include the development of new, heavy-use commercial industries, general economic recovery, and customer growth. Demand is expected to continue increasing into the future as more customers adopt electric vehicles and other new electronic consumer devices. In fact, electric vehicle sales are projected to grow by 300 percent or more in the next 10 years.
  2. EPUD’s historical sources of power are now limited.
    To serve customers’ growing demand for power, EPUD must find cost-effective power resources. Historically, this meant buying additional cheap hydropower from Bonneville Power Administration (BPA). Several years ago, however, BPA placed a limit on how much public utilities can purchase from them. As a result, EPUD must find new resources to serve growing demand.
  3. We are losing a power resource in 2027.
    EPUD has an existing power contract that will expire within 10 years, and along with it, power to serve nearly 2,500 of our customers’ homes. We need to make up that gap but how we do it will influence if rates remain steady or require substantial increases.
  4. It is financially risky to build power plants.
    Power plants are expensive to build and can be a financial drain for customers. Risks related to building costs, regulatory approval and environmental approvals make these projects inherently difficult for even the largest utilities.About 10 years ago, EPUD attempted to build two hydroelectric facilities near Dorena Lake and Fall Creek. Increased cost estimates and operational constraints prevented it from being a viable project. Luckily, EPUD was able to withdraw and recover its $2.5 million investment. If EPUD had not been able to back away from building these facilities, the financial loss would have been in the millions and translated into dramatically higher electric rates for our customers.
  5. It is financially risky to buy power through long-term contracts.
    Most long-term power supply contracts last for a duration of 10–20 years. With the rapid technological advances in the world, it is risky to make predictions on what innovations will transform our lives and impact power supply costs far into the future.Take solar energy for example. The price of solar has declined by well over 50 percent in the last 10 years. If EPUD had contracted to buy solar energy at a higher price years ago, our customers would end up paying that high price today even though prices have fallen.

The Solution

  1. Energy efficiency is a more cautious approach.
    It allows EPUD to take a slower, incremental approach to meeting our long-term power supply needs. Rather than making a large financial commitment upfront, we can invest steadily and cautiously over time. Energy efficiency provides a double benefit for customers. It reduces customer bills and helps prevent unforeseen rate increases.
  2. Energy efficiency is EPUD’s lowest cost power resource option.
    As compared to investing in new power resources from solar, wind, hydroelectric, or natural gas, energy efficiency has been found to be the cheapest option for meeting growing customer demand. Put simply, it is cheaper to offer rebates to help customer use less power than to enter into new contracts to purchase power. This view is backed by the Northwest Power and Conservation Council, which sets power planning targets for the entire region.
  3. Energy efficiency also lowers peak demand.
    One of the largest challenges facing any utility is ensuring it has enough power during times when customer demand is at the highest. We call that the peak. That also is when energy costs the most for EPUD to purchase. Energy efficiency is a vital tool that helps reduce peak demand so we can save money for you, our customer-owners.