Hermiston Energy Services recommends new substation
Published 12:58 pm Tuesday, May 24, 2016
- Electrical equipment is stored on the Umatilla Electric Cooperative yard on West Elm Avenue in Hermiston.
Hermiston Energy Services is recommending a rate increase and bond refinance to pay for projects that should decrease the number of power outages in Hermiston.
HES superintendent Nate Rivera told the city council Monday night that the city’s electric utility was in need of several upgrades, including a new substation and smart meters.
After two power outages so far this month, city councilors were inclined to agree.
“I think people are willing to pay for less outages,” John Kirwan said.
The first major project would be a new substation called Hermiston East, which would cover territory east of Highway 395 that is currently covered by the Butte and Feedville substations. The project would include a new transformer and new feeders, taking the load off of some of Hermiston’s other feeders that are at more than 90 percent capacity during peak load times.
Rivera said the new substation would reduce outages and would also free up capacity for people to be switched from one substation to another while crews were working to restore power.
“This would minimize the size of the outage and get people back up faster,” he said.
The project would cost an estimated $985,000 and be completed during the 2016-2017 fiscal year. Rivera also recommended other maintenance projects, including pole replacements, a switch to LED street lights, sectionalizing the system to reduce the spread of outages and a more proactive tree trimming program.
“Typically the outages we see are wind and tree related, so the more aggressive we can be about that, the better,” Rivera said.
He also recommended the adoption of smart meters that would tell HES when the power is out.
Currently, the utility depends on customers to report when their lights go out, and then depends on a visual check of the neighborhood to assess how far the blackout extends.
“We’re still driving around with our head out the window,” Rivera said.
A smart meter system would alert HES as soon as the power goes out and give a map of the outage, allowing crews to more quickly pinpoint the problem and begin working to fix it. It would also save on operational costs for meter reading and allow HES to give customers a more detailed account of how their power use fluctuates throughout the day.
The estimated cost would be between $1.5 million and $1.75 million.
On Monday Rivera presented the reliability numbers for HES, noting that in 2015 Hermiston Energy Services customers were without power for an average of 3.5 hours over the year.
The average, however, is not spread out evenly. Some connected to the Butte substation, for example, experienced power outages on May 18, May 13 and Feb. 22 while other HES customers have not experienced any disruption in service all year.
A mid-2014 comparison by the East Oregonian found that HES customers were without power an average of 3.6 hours over the course of past 12 months, compared with 3.1 hours at Umatilla Electric Cooperative, 1.4 hours with Pacific Power and less than a minute with Milton-Freewater Electric.
“We’re providing service 99.96 percent of the time, but people notice when it’s off,” Rivera said.
Improving reliability costs money, however, and Hermiston Energy Services doesn’t have as much as it used to. The utility didn’t raise rates between 2003 and 2015, preferring to subsidize operating costs through its reserve fund rather than increasing costs. As a result, HES rates for the average residential customer run at about $116 per month, compared to $118 for UEC, $199 for PGE and $227 for Pacific Power.
Rivera said in 2014-2015 alone the utility used almost $1 million of its reserves, which is why the city implemented an 11 percent rate increase in 2015.
Much of the increased cost of doing business came from continued increases in price from Bonneville Power Administration, which sells Hermiston Energy Services its wholesale power. Those increases are expected to continue on a regular basis.
To put HES operations in the black and also come up with the money for capital improvement, Rivera recommended the city approve a rate increase of approximately 4.4 percent per year for the coming fiscal year and a similar or larger increase the year after.
He also recommended that the city refinance the bond that funded the formation of the municipal utility in 2001. There are currently 17 years left on the bond, and various refinancing options would save the city money on interest payments.
Rivera said the budget he has submitted for 2016-2017 includes $500,000 for the new substation, and a bond refinance would mean that the utility only had to pay on interest, not principal, in 2016-2017, providing an extra $450,000 in savings to also pay for the new substation.
“It really makes sense for us to look at this,” he said.
City councilors and Mayor David Drotzmann agreed.
“We can’t keep using our savings,” Drotzmann said. “That’s not sustainable.”
Nothing was adopted at Monday’s meeting, but Rivera said now that he has direction from the council he will put something together on the refinance and rate increase and come back to the council later in the summer.