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NID Board Approves Historic Power Sale Agreement

Directors of the Nevada Irrigation District on Wednesday (May 9) approved a power sale contract that is expected to benefit NID, its ratepayers and the greater community for many years to come.

“This is a monumental moment for the Nevada Irrigation District,” said NID Board President Nick Wilcox.

Under the 20-year fixed payment agreement, NID will market its Yuba-Bear Power Project hydroelectric energy production to the Pacific Gas and Electric Company. The agreement commences July 1, 2013 upon expiration of the current NID/PG&E consolidated contract.

Finance and energy consultant Michael McDonald, who helped NID negotiate the contract, said his firm’s estimate of annual power sales is $20 million, growing to $30 million over the life of the contract.

“You’re receiving the value we estimated; this is almost exactly within our expected results,” said McDonald, whose Bay Area-based firm has negotiated numerous similar agreements. “This is a very fair and balanced contract,” he said. “I can recommend your approval without hesitation.”

McDonald and NID General Manager Ron Nelson, who have been working toward the new contract for the past two years, applauded PG&E for its straightforward and professional approach to the negotiations.

NID’s primary objective through the negotiations, McDonald said, was to obtain maximum value for power generation without negative impacts on NID water rights and water usage now and into the future.

The contract marks a new chapter in NID energy production. The district built the Yuba-Bear Project in 1963-66 under a consolidated contract with PG&E. Over nearly 50 years of operation, the cost of the original $65 million project has been repaid through power sale revenues.  Meanwhile, PG&E has paid for operation and maintenance of the system.

Under the new contract, NID will assume responsibility for operation and maintenance of the power project and will earn revenues from its production. Revenues from gross power sales are intended to cover operation and maintenance costs and produce significant revenues to NID.  Details of a new companion operating agreement with PG&E are still being worked out.

The new power sale agreement has already been approved by PG&E, said Lien Chung, an energy procurement representative with the company.  PG&E will now file for approval by the CPUC, a process that is expected to take 6-9 months.

1 Comment

May 10, 2012

Steve Sagan

So how is this going to impact the water and electricity costs of the people in the areas where this energy being sold elsewhere in the state is produced?

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