The city of Cortez is renewing its power purchase agreement with Empire Electric Association Inc., which allows the electricity company to harness power from the city-owned hydroelectric power plant outside town.
But a hitch in the process is translating to lost revenue for the city, and employees of the Public Works department are scrambling to find an outlet for the power generated by the hydro plant.
The original 10-year contract between Empire Electric and the city of Cortez runs out at the end of August, and the city has signed and returned a new 10-year contract with the utility company.
However, any contract needs to be ratified by an outside federal agency, which could take up to two months, according to Public Works Director Philip Johnson. And Empire Electric will not accept the power source from the city until the contract is finalized, even if the city provides it for free.
“We would just give them the power,” Johnson said, but Empire Electric’s rules do not allow for that without a ratified contract.
The city needs to find an outlet for the power within 10 days, or before the end of the month, when the original contract closes out and the hydro plant is removed from the grid.
“We can’t just let the turbine spin because it will get ruined and destroy itself,” without the water to slow it down, Johnson said. The generator can’t spin without producing power, and “if it doesn’t have an outlet it will break,” he said.
The hydro plant also serves as a water meter, reporting water levels to the Division of Water Resources and the Dolores Water Conservancy District. If the plant were shut off, the agencies would not have the water data they need.
“It’s their main source of metering to track and report water rights,” Johnson said.
The rate of return on Empire Electric’s power purchase agreement will also be cut in half, and the city uses that money for debt service payments.
“We have to use all of our reserves to make the debt service payment,” Johnson said.
While Johnson said this should not affect water rates in the area, the city is working to find a solution for funding for debt payments in the future.
“We’re caught between a rock and a hard place,” said Cortez City Manager John Dougherty.
The city reached out to the Colorado Water Resources and Power Development Authority, which provides low-cost loans to government agencies in Colorado for water infrastructure development. The Authority offered to refund the city of Cortez for the lost revenue, but Finance Director Ben Burkett said the city wouldn’t receive the money in the right time frame.
Johnson is heading out to the hydro plant next week with engineers to find out if they can reconfigure the piping and build a vault.
“We’re trying to develop a reasonable response so we’re ready to start producing power again,” Johnson said.
ehayes@the-journal.com
