Stillwater News Press

August 21, 2013

Officials: New contract gives city more power stability

By Nick Woodruff
Stillwater NewsPress

STILLWATER, Okla. — The words may be confusing, but the contract makes sense.

Stillwater Utilities Authority Director Dan Blankenship said the SUA’s new contract with the Grand River Dam Authority provides stability for the city of Stillwater. Blankenship said many people believe when the city signed a contract with the power provider, it would be obligated to build a new electrical power generation station, but this is a misconception.

The new contract with the power provider guarantees the city’s electric rates can never exceed the amount it costs the Grand River Dam Authority to generate electricity, Blankenship said. He said this is approximately a 29-year contract and was a smart move for the SUA because the city will have electricity at cost for the duration of the contract.

“The contract with the GRDA guarantees our (Stillwater) power rates for almost 29 years,” Blankenship said. “We weighed the different options and this was the best bet for the city.”

Blankenship said if the city was to buy electricity from an investor-driven power provider, the rates would fluctuate with the market. He said some years the rates would be rather low, but other years the rates would be “out the roof.”

The contract with the power provider guarantees Stillwater a rate that is in contrast with the amount it takes to produce the energy. Blankenship said this is the main thing people need to know about the contract.

The second thing people need to know about the contract, Blankenship said, was the city has three options as an electrical power producing city.

The city can disregard its Boomer Lake station and become a city that doesn’t generate electricity. Even though Blankenship said he doesn’t see this option being Stillwater’s future, if costs out-pace revenue, the city can think about this option.

The second option is overhauling the Boomer Lake steam engine station. He said the station has been overhauled once in the 1980s and in approximately five years it will have to be overhauled again.

The Grand River Dam Authority said it would pay the city approximately $1.2 million a year to have this station, Blankenship said. Unfortunately, the costs and overhauling of the station would more than likely be more than the $1.2 million revenue it would be getting from the power provider.

If option two is the best bet and will not cost the SUA any money, Blankenship said the city would consider this option.

The third option, and the option Stillwater hopes to pursue, is creating a new natural gas electrical power generation station, Blankenship said. He said the natural gas engines can be started and producing electricity in approximately five minutes, compared to the steam engines at Boomer Lake that take approximately eight to 10 hours to be started and producing energy.

Not only will the new station be more efficient, it will also generate 56 megawatts of electricity a month if it runs at capacity. The steam engine station at Boomer Lake produces approximately 27 megawatts a month at capacity. The new station would more than double generation capabilities.

Blankenship said with the new generation station, the Grand River Dam Authority is guaranteeing the Stillwater Utilities Authority $4.5 million a year. When the city’s utility authority looks at funding the project through a bond, he said the city will make sure the payments don’t exceed the $4.5 million benchmark.

Loren Smith is Stillwater’s generation and transmission division manager. He has worked beside Blankenship to get the contract and project going. He said it makes sense for the city. The last thing the city would do is take on something it couldn’t pay for, Smith said.

Smith said he believed the city would make a little money, but it will depend on the bond payments.

When the station is completed, Smith said it will be the best electrical power generation station in the area.

“This new station will be the best station in the state,” Smith said. “It’s really efficient and actually will be one of, if not, the best station in the region.”