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Historic investment led to long-term power dividend

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By The Staff

Walk into a dark room at midnight, flip the switch, and the light blazes forth.

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Electric power, a willing and dependable servant, comes on thousands of times a day in Los Alamos County—and it only costs 9.07 cents per kilowatt hour (kWh) for a residential customer.

By contrast, Los Alamos Utilities Director John Arrowsmith said in a recent interview, on the spot market, purchased power has run as much as 12 cents per kWh in the past year.

New developments in Los Alamos County utilities could soon make available even more power at roughly the existing low price. 

A Diversified Plan

There’s a complex history behind the county’s good deal on power.

It began with discussions in the 1970s when the county and Los Alamos National Laboratory (LANL) were both struggling with the skyrocketing cost of fossil fuels. As Congress and New Mexico enacted laws allowing local governments to build their own hydroelectric power plants, interest in a Los Alamos initiative grew. Finally, the necessary decisions were made, and the county made bold moves in planning, financing, and construction.

Most of the work was done under the administration of long-time Utilities Manager Chris Ortega, now retired, but it is continuing today under Arrowsmith’s administration.

The result: Los Alamos County’s price for electricity has been relatively low since the early 1990s, because of a diversified power plan paid for by a $110 million bond issue approved by the voters.

The county’s power (which also serves LANL) now comes from seven sources:

• The San Juan Generating Station near Farmington, a facility operated by the Public Service Company of New Mexico—36 megawatts (MW);

• Laramie River Station in Wyoming – 10 MW;

The county’s hydroelectric power plant at El Vado Dam on the Chama River – 8 MW;

• The county’s hydroelectric power plant at Abiquiu Dam on the Chama – 15 MW;

• LANL’s three-unit steam turbine at Technical Area 3 (TA-3) – 20 MW;

• LANL’s 20 MW combustion turbine at TA-3 – 20 MW; and

•  County and laboratory allocations from the Western Area Power Administration – 20 MW.

The assets in the mix draw on different power sources—hydroelectric power, coal power, and gas and oil power. As a result, the county has flexibility and resiliency when the price of one commodity rises or drops sharply. 

That $110 million bond issue – which provided funding for several projects including construction of the two hydroelectric power plants (at El Vado and Abiquiu dams) – will be paid off in the year 2015. At that point, the price of electricity in the county could drop even lower than it is now.

The development of the power pool wasn’t easy. Long-time residents remember the struggles by diving contractors to remove a concrete plug in a tunnel deep under water at El Vado; the importation of huge pieces of equipment from places such as Yugoslavia and China; the fact that the county and the first contractor at Abiquiu agreed to disagree; the negotiations with the lab; the concerns about cost and bonding; the hundreds of Utilities Board and County Council meetings struggling with highly technical decisions.

Nevertheless, power generation at El Vado began in late 1988 when county contractors completed work on a plant nestled in a canyon at the base of El Vado Dam. When the $12.9 million plant came on line with a single turbine, it had a rated capacity of 8000 kW (8 MW). In practice, the county found that it could produce as much as 10 MW there.

Power generation in the county’s next plant, built below Abiquiu Dam, came in 1991. This second power plant, built at a cost of $21.3 million, had two generators and a rated capacity of 15 MW.

Building for the Future

In November, construction work will start on a project that will add a low flow turbine-generator and boost Abiquiu’s total plant capacity by 20 percent to 18 MW. Design work is already in progress. The estimated completion date is in 2011.

As it stands now, the two existing Abiquiu turbines cannot operate when the Chama River drops below 235 cubic feet per second (cfs). In addition, the turbines cannot handle the water flow when it rises above 1500 cfs (and at times, it reaches 1800 cfs).

With the new turbine in place, it will be possible to operate the power plant when the river is as low as 75 cfs. In addition, when river flow rises to 1500 to 1800 cfs, it will no longer be necessary to route water around the plant. “The new unit will allow us to generate with it all,” Arrowsmith said.

RMCI was the lowest of three bidders on the $8.5 million county project to add the low flow turbine-generator at Abiquiu.

Arrowsmith noted, “RMCI had a novel approach that saved money.” A major part of the cost is finding a way to hold back the Chama River to keep the power plant area dry while an extension to the power house is built. RMCI’s plan will only require diverting water once instead of twice.

Why More Power?

Asked why the county needs the additional power that the new Abiquiu project will provide, Arrowsmith noted that although, on paper, the county’s sources of power add up to a capacity of 129 MW, the reality is somewhat more complex.

The hydros, for example, are “run of the river” facilities. When the river level drops below the minimum for generation (235 cfs now, 75 after the new project is completed), these plants must shut down. They actually operate about six months out of 12.

The laboratory’s two plants are gas/oil fired, and, as a result, expensive to operate. They are rarely used.

And the price of power from other sources can vary considerably depending on the cost of natural gas (which usually tracks the price of oil)—a factor that can cause the county to think of varying its mix.

Meanwhile, the total load for Los Alamos County now is 80 to 90 MW. The county itself can go as high as 19 MW. The lab can go up to 70. Fortunately, the peak usage by these two partners falls at different times.

Nevertheless, Arrowsmith said, the reality now is such that, “We buy and sell (on the spot market) all the time.” And the price in the spot market is usually notably higher than the average price for power from the county’s own pool.

Will Prices Be Affected?

Arrowsmith noted that the Abiquiu plant “was built anticipating that this (addition of a third generator) could be done someday. That makes it a lot simpler.”

Because the space for the new turbine already exists, and because the new power will, in effect, simply reducie the need to buy on the spot market, Arrowsmith said, “This (new) plant is not going to affect the price of electricity substantially.”

Asked how the cost of the new project will be funded, Arrowsmith said that this project, like the earlier projects, will be funded with bonds.

He noted that the new power from Abiquiu will qualify as “renewable” (less than 5 MW and built after 1999) under federal guidelines, and will, therefore, be a resource that can be sold if the county has excess power.

Will the cost of power purchased by the Los Alamos consumer still drop in 2015 when the $110 million in “old” bonds is paid off? Arrowsmith said the effect will depend on decisions about what is best for the county. He noted, for example, that the savings could be used for replacing or undergrounding lines to improve reliability and eliminate power failures. It also might be possible to add new renewable resources such as photovoltaic power to the Los Alamos mix.

As in the past, all decisions will involve the Utilities Board and the County Council.

An Assessment

As the county observes its 60th birthday, it’s important to assess whether the $110 million utilities-bond projects have been good for Los Alamos.

Arrowsmith says the answer is yes. He believes that the power pool has brought the county financial independence, sustainable power, renewable energy, a strong bond rating and a reputation as a good neighbor.

“…We’ve converted all that flow (of the Chama River) for the last 20 years to electricity, when otherwise, it would have been wasted,” he said. He noted that the hydros built by Los Alamos County have “provided about 10 percent of the combined power for the county and the laboratory all this time.”

Without the county’s power pool, he said, “We would have been buying more and more on the spot market,” and the price would have been exorbitant.

He also noted, “A substantial part of our generation (perhaps as much as 30 percent) has no carbon emissions.”

Would he do it all again if the decision were up to him? “Yes,” he said—without hesitation. He believes that the program has been “good for the public, good for the laboratory, good for Northern New Mexico.”

Lawry Mann, who served many years on the Utilities Board and the County Council while the power pool was under development, put it another way. “This is something we’re giving to the next generation,” he said, “rather than taking from them.”