Public utility authority pans Redco's rate hike request

By JENNIFER DENEVAN, Needles Desert Star

Monday, July 26, 2010 4:47 PM PDT

NEEDLES - The Needles Public Utility Authority rejected changes requested by Renewable Energy Development Corporation, Redco, to the terms of a purchase power agreement to implement a 1 percent price escalator during the NPUA and city council meeting July 13.

Ryan Davies, president of Redco, said he understood why his request is unpopular. It wasn't a request Redco intended to make but circumstances have changed.

Redco has a purchase agreement with the city for a five megawatt solar power plant. The city would purchase power at $128 per megawatt. A 1 percent escalator would increase the cost from $128 to $156 by the end of 20 years.

He reminded authority members about the work Redco has completed thus far, including working to secure land for the plant.

Redco discovered what Davies called fatal flaws in the technology they were going to use. Those flaws included cost and efficiency issues.

Davies said because of the different technology and other elements, without the escalator Redco will eventually lose money on the project, not make it. They didn't originally include the escalator because the technology they were going to use was significantly cheaper, he said.

He and other Redco personnel looked into why the utility board and city staff would recommend not accepting the changes and he said he thought he could understand the reasoning - economics and potential exemption from the state renewables portfolios standards program.

The program was introduced in 2002 and is geared to increasing the amount of renewable energy used by the state, which now mandates 33 percent of energy be renewable by 2020. The California Air Resource Board had staff review the program and staff advised cities that purchase less than 200,000 megawatts not be included because the administrative costs would outweigh the environmental benefits, David Brownlee, Jr., assistant city manager said. Needles purchases 57,000 megawatts (57 million kilowatt hours) of energy in a year.

Davies said he wanted to remind the utility authority the waiver from the standards program wouldn't be permanent and would preclude the city from selling the renewable energy credits. He thought the idea is to keep municipalities from being able to double dip, he said.

Additionally, the intent of the exemption is to encourage solar development in areas that are mandated to have it, Davies said, therefore decreasing the odds of additional solar development in small areas such as Needles. He said he understood the city's economic situation but there are advantages to having it on their own, such as avoiding price increases and power shortages.

Brownlee said the city may be exempted from having to purchase renewable energy to begin with, so taking on additional cost doesn't make sense. It also simply is out of budget for the city, he said. “We welcome solar power,” he said, “but we can't buy it at that price.” Public comment included support for Redco and agreeing to the escalator. Some residents agreed it's worth some cost because there are opportunities to export commodities. There were concerns if Redco is turned down then other companies won't be interested in coming to Needles because it might appear the city isn't willing to work with groups.