Pascoag Utility District Successfully Executes Power Supply Strategy

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May, 2011

 

PUD, together with its energy advisor Energy New England, was able to successfully execute its 2012-2014 power supply strategy as approved by the Board of Utility Commissioners for an extremely beneficial deal in sourcing the Standard Offer Service component of our rates. The basic structure of the deal is this:

 

Term: 3 years beginning in January 2012

Structure – it is called a load following deal. What that means is that hour by hour the counterparty, Constellation Energy, will provide the power we anticipate needing over and above what we already have in other long term contracts such as NYPA, Seabrook and Miller Hydro. So this deal basically fills the gap in our power needs on a continual basis as our customer send-out fluctuates with weather, turning on and off appliances and lights, etc.

There will be little or no excess generation sold back to ISO-NE with this type of structure. For 2012, Constellation will fill the gap completely, in 2013 they will fill the gap up to 80% of our needs, and in 2014, they will fill the gap up to 75% of our customersÕ needs. We left a little room in 2013 and 2014 for other offers that may come up such as the potential Burrillville micro-hydro project or other renewable energy offers, or for other long term power projects that make sense.

Here is the best part… Because of the low cost in the natural gas markets right now, and because the power market in New England correlates very closely with natural gas prices, we were able to secure this deal for all three years at an extremely competitive rate.

At a minimum, PUD projects that this transaction will save over $500,000 on an annual basis compared to 2011, and will minimize non-efficient sales that we sometimes make back to the power grid operator known as ISO-New England.

 

This will be a great program for the Pascoag Utility District in helping us keep the Standard Offer power supply portion of our rate structure very competitive for the next three years. Energy New England was a critical partner in helping us execute this strategy.

 

I also want to thank the Board for allowing me and my management team to push this forward.

 

Mike Kirkwood

General Manager

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