The rural utility district has a potential buyer for the proposals that were once called a “nightmare”
By Susan Palmer
The Emerald People’s Utility District may have a buyer for two hydroelectric proposals that it has spent millions of dollars on, but that are years away from actually being built.
A publicly traded Canadian company has expressed interest in buying the utility’s Dorena and Fall Creek proposals, said EPUD general manager Frank Lambe.
He declined to name the company, but said that if negotiations go well, the deal could be completed by the end of the year. EPUD has not disclosed the proposed purchase price.
EPUD – a publicly owned utility – teamed up with Utah-based Symbiotiecs, an engineering firm, seeking to put turbines on dams constructed for flood control by the U.S. Army Corps of Engineers back in the 19402.
Once built, each project would supply enough power for about 1,000 homes and would add modestly to EPUD’s power generation. EPUD currently buys almost all of its power from the Bonneville Power Administration.
EPUD serves 20,000 customers in the rural and suburban areas surrounding Eugene and Springfield in a district that includes 19 towns and parts of four Oregon counties.
EPUD initially thought the hydro projects would be a good investment that would provide more power from renewable resources.
But anticipated construction and licensing costs have increased while the utility’s revenues have been declining because of the economic downturn.
One EPUD official described the utility’s involvement in the hydro proposals as having turned into a "nightmare.”
The original estimate for the Dorena project in 2007 was $8 million. Now the best guess is $20 million, Fall Creek estimates have ranged from $14 million to $24.5 million.
Water quality improvements and fish passage needs have driven up the costs, utility officials said.
While the Dorena proposal has been licensed by the Federal Energy Regulatory Commission, the project is delayed because neither EPUD nor Symbiotics can afford the construction price tag.
The two formed a limited partnership to move the projects forward and had hoped to take advantage of federal stimulus funds as well as tax credits. But they have discovered that the stimulus funds for energy projects can only go to for-profit companies and the utility doesn’t qualify on that score. To use tax credits, you need to have a tax liability, and EPUD doesn’t.
The Fall Creek hydro concept has not yet passed federal requirements and is not yet licensed to proceed.
Last month, the EPUD board voted to let Lambe negotiate a sale of its stake in the proposals, with Symbiotics as the likely first choice. But now a third party has expressed an interest, Lambe said.
The utility will keep the option of buying back the projects if they are built, Lambe said.
EPUD estimates it has spent S1.8 million on the Dorena plan and $664,000 on the Fall Creek proposal as of the end of July.
The utility’s board meeting minutes make it clear that the board and staff knew going in that the projects would take a long time to complete.
At the Aug. 6, 2007 board meeting, Lambe said it could be 2017 before Fall Creek generated power.
By August 2009, Lambe was warning the board that high costs might mean EPUD couldn’t move forward without federal financial help.
By the Jan. 12, 2010 board meeting, outgoing board President Penny Jordan — in a state-of-the utility-recap — said the two projects "had turned into a nightmare.”