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Steve Wright | Insurance paid dividends when generators went down

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Some might say that I’m an incurable Columbiaphile – that is, I love everything about the Columbia River. That was one of several reasons why I was drawn to Wenatchee and the Chelan PUD. The incredible hydropower resources that we enjoy here are the envy of electricity consumers around the country – low cost, renewable and reliable power. From our Board of Commissioners to the hydro mechanics on the powerhouse floor, it was reassuring to me to see how well-run this utility is. You can imagine my surprise when less than a month after I arrived, our four largest generating units at Rocky Reach needed to be taken out of service. That meant a quarter of our power production wouldn’t be available until repairs could be made to correct a newly discovered design flaw that goes back to when the turbines were purchased in the 1990’s. These are projects that are roughly 15 years into their 40 year life. Repair costs and months of replacing the low cost power from Rocky Reach will easily cost many millions of dollars. Brian Odell, who has spent more than 30 years working with our hydro units, said the PUD had never had a hydro problem this big before.

So, why is my hair not on fire? For the very reasons that drew me to the PUD in the first place – the incredible dedication and foresight of the people who work for our customers is allowing us to manage through this with no new rate impact on you.

Long before the crisis hit at Rocky Reach, people at the PUD were thinking through how to position for the unexpected. Our power marketing group created new long-term contracts that include cost-sharing provisions with outside the District power purchasing customers that limit the impact to District ratepayers of incidents such as this.

Financial staff put in place both standard and creative insurance policies that offset much of the likely repair and lost generation costs. The Commissioners’ commitment to build financial reserves positions us to offset the remainder of the costs. Bottom line is that unless things get a lot worse, we should be able to weather this storm without needing an electric rate increase. That’s a remarkable achievement.

Managing well for the unexpected is mostly work that occurs out of the limelight and could have been given a low priority. Hydro units don’t go down that often and the easier path would have been to ignore the risk. Yet that is not what happened. Thoughtful work put in place in the last five years, that everyone hoped would never be needed, is now paying off. What could have been a significant financial problem for the community (and for me) to deal with has been substantially reduced.

We all tend to focus more on things that have gone wrong than problems avoided. There are huge challenges associated with repairing these units and getting them back in service. Yet these problems seem manageable due to our financial strength. Policies that were put in place by District leadership several years ago before I got here, that have been thoroughly evaluated and implemented by staff, are deserving of praise.

Steve Wright is general manager of Chelan County Public Utility District. He can be reached at steve.wright@chelanpud.org

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