Prepared for 2025
Market and deliver reliable, cost-based hydroelectric power and related services to customers—that is Western’s mission. At the heart of that mission are the firm power contracts that detail power allocations and services for each customer.
In the last week of 2014, Western’s Rocky Mountain Power Marketing Office celebrated the first Loveland Area Projects’ 2025 contracts signed by customers. “The 2025 LAP Contracts give our customers assurance that their highly valued power allocations will continue well into the future,” said Rocky Mountain Vice President of Power Marketing Dave Neumayer.
The current LAP contracts expire Sept. 30, 2024. “For a number of years LAP customers have been looking to confirm that their power allocations with Western will continue beyond this date,” said Neumayer. Having contracts for an additional 30-year period adds stability to customers’ energy portfolios for future planning and ensures Western will continue to meet its revenue requirements.
Once signed, the 2025 LAP contracts became effective immediately, but the contracted power will not be delivered until Oct. 1, 2024. The new contracts will not expire until Sept. 30, 2054. “It’s a strange feeling to sign a contract that will last longer than the employment of almost everyone currently at Western,” said Neumayer.
Conversations early, often strengthen marketing plan
These long-term contracts are not just long standing, they are also a long time in the making. Contracts mark the final milestone in developing a marketing plan to sell wholesale power generated by federal agencies, including power generated by the Bureau of Reclamation’s and Army Corp of Engineers’ hydropower projects units.
Before Western begins any formal marketing plan process, concepts are often discussed with customers and other interested parties to gain informal input. Then Western runs a formal process that can take several months to several years depending on the complexity. In the case of LAP, a power marketing initiative, or PMI, was completed that revised and extended the existing power marketing plan.
During this development, Western holds several public meetings, prepares documentation to ensure it complies with the National Environmental Policy Act and works with the generating agency study the available generation. “The Reclamation resource study did not warrant changes to our marketed energy or capacity, so the 2025 LAP contracts are based on the same resource that is currently marketed,” said Neumayer.
Once the PMI is final, contracts are developed to specify all the detailed terms of the agreement. Each contract has provisions tailored to the individual customer, such as the amount of long-term firm capacity and energy the customer may receive and delivery point locations.
“It’s been a long road and a lot of work goes into executing contracts to achieve Western’s core mission,” said Neumayer. “RM staff did a terrific job throughout this process.”
LAP customers get added value in updated contracts
With many years of experience answering questions and explaining firm electric services contract provisions, the RM Contracts team knows which provisions prompt the most questions from customers in the past. “Using their experience, the team updated the wording of key provisions to maximize simplicity, while increasing the precision of the contract language,” explained Neumayer. “Our existing firm electric service contracts are very good, but these future contracts are exceptional.”
In addition to clarifying the provisions, Contract staff pored over each of the LAP contracts that provide firm electric services to 123 customers to ensure each customer has the right contracts, subcontracts and addendums to cover various situations that may occur during the new contract period. “Some of our customers lump their power allocations together under a member-based association to provide an integrated portfolio of resources. These new contracts simplified how allocations can be assigned to a member-based association in a way that protects the individual customer, while allowing flexibility,” said Rocky Mountain Contracts and Energy Service Manager Bob Langenberger.
The 2025 contracts include three opportunities for allocations to new customers by creating a resource pool of up to 1 percent of the current LAP generation. Rocky Mountain will hold a public process about every 10 years to determine if applicants qualify for LAP power with any new customers beginning service in October of the year 2024, 2034 and 2044.
“By offering continuing contracts and periodic resource pools, Western is ensuring that that the federal hydropower has a widespread benefit across the LAP marketing territory and Western’s core mission continues to be successfully achieved,” said Neumayer.