The city of Cortez took its hydroelectric plant off the electricity grid Tuesday as it waits for a contract renewal with the Empire Electric Association to be ratified by the Federal Energy Regulatory Commission.
The Public Works department managed to find a bypass solution for the water that flows into the hydro plant over the past month after Empire Electric clarified that the plant would be disconnected if the contract between the two entities was not approved by the federal agency.
And approval can take up to two months, said Phil Johnson, director of Public Works.
Public Works aims for the bypass solution to be a potentially permanent one, in case demand for water supply in the area increases with new developments, Johnson said.
“It’s something we needed to address anyway,” he said. As a local government agency, Johnson said, “We fix problems – we live and work with everybody here.”
The water plant, located on County Road N, existed before the hydro plant was added, so Johnson and city engineers repurposed original piping to direct water to the pond or the plant.
The Public Works department also is using an existing flume that goes into the reservoir to track water levels for the Division of Water Resources and the Dolores Water Conservancy District, something the hydro plant has been tracking.
“We are looking at installing some telemetry and metering,” Johnson said. “In the long term, to have these things in place is beneficial.”
Timing of new contract a ‘perfect storm’City staff members were frustrated with the short time frame they were given to finalize the contract with Empire Electric and find an outlet for the hydro plant if the co-operative could not accept power produced by it.
The turbine couldn’t be left to spin without water flow, or it will damage itself, and the generator can’t spin without producing power because it would break.
The timing also is translating to lost revenue for the city, Johnson said. The rate of return on Empire Electric’s power purchase agreement will be cut in half, and the city uses that money for debt service payments.
Empire Electric reached out to City Manager John Dougherty on April 23, and Johnson said he received documents from the association at the end of the first week of May.
Dougherty declined to comment for the story.
Josh Dellinger, general manager of Empire Electric, said in a letter to The Journal that if the city had been “responsive to our communication efforts, we would have everything in place to continue uninterrupted operations by now.”
“But, despite our frequent urgings, the City delayed the process and now finds itself in a predicament,” Dellinger wrote.
Empire Electric also is “offering a competitive price based on current market conditions for electricity” in the new contract, Dellinger wrote. The original 10-year contract between the association and the city, approved in 2010, “reflects renewable electricity prices from 10 years ago and the market price for renewable power has dropped significantly.”
The general manager stressed that Empire Electric has “worked hard to partner with the city,” including providing a $3,000 rebate for the electric vehicle charger at the Welcome Center and its donation of “significant money and labor to replace streetlights on Broadway.”
“The position the city now finds itself in is one of its own making, and it is now dealing with the consequences of its own inaction,” he wrote.
Dellinger also declined a phone interview with The Journal.
But Johnson said that for the city to “get our heads around a new contract” and then explain it to the City Council takes time, especially with a number of new council members.
“I was stunned and shocked our revenue stream would be cut in half,” Johnson said. “We could have received the contract much earlier in the year.”
With the onset of COVID-19 and the adjustment to working at home, as well as the unknown future of the city’s finances after the economic impact of the virus, the timing of the contract was the “perfect storm,” Johnson said.
The city had been working to find a way around the disconnection of the hydro plant before scrambling to do so in earnest midway through August, two weeks before the original contract with Empire Electric expired.
The outreach date of April 23 was “not an equitable amount of time to meet what we’re up against,” Johnson said.
“We all serve the same customer base, and we could do a better job of communicating without being so clinical,” Johnson said.
