The Overton Power District #5 (OPD) has taken a major step in improving the reliability of service and containing costs for its customers. In the regular Board of Trustees meeting held Wednesday, February 20, the OPD Board of Trustees approved a historic agreement with regional utility NV Energy that promises to accomplish both of those things.
Included in the agreement is the construction of a second 230 kV transmission line from the Reid Gardner switchyard, across 2.3 miles of BLM land, to connect into the OPD system at Tortoise substation in Moapa. This new line will provide redundancy to prevent system-wide outages like the one that occurred on January 21 of this year. The new line, estimated to cost in the millions of dollars, would be entirely paid for and constructed by NV Energy, according to the agreement. “This second line into Tortoise substation is something that we know we have needed for a long time,” said OPD General Manager Mendis Cooper. “This agreement makes it possible at no cost to our customers. There will be no change to our rates directly because of it. That is a great benefit to our ratepayers.”
The agreement also locks in reasonable terms for NV Energy to continue to provide power transmission services to OPD well into the future. The OPD has its power purchase agreement through national power brokerage Morgan Stanley. But the district has long depended upon delivery of that power over existing NV Energy transmission lines to OPD’s Tortoise substation hub.
Since 1989, that transmission service has been governed by a Tri-party Agreement (TPA) between OPD, NV Energy and Lincoln County Power District. But over the past 30 years, regulations on power transmission services have changed. The old agreement has raised complications for NV Energy in calculating OPD transmission rates in view of the new regulations. As a result, OPD has seen transmission rates increased in recent years. “There was concern on both sides,” said Cooper. “NV Energy saw a need to phase out that old agreement and bring us in under the current regulations that apply to all of their customers. But at the same time, we were under this legacy agreement that had real value to us. This new agreement really amounts to NV Energy buying us out of that Tri-party Agreement and making us whole for its fair market value. That was the goal.”
Construction of the new transmission line with no upfront cost to OPD is a major element in making the district whole. In addition, the agreement grants OPD a transition period during the construction period of the new line. During that time, OPD is given a total of $1.4 million in credits which can be used to offset transmission costs. OPD can claim as much as $35,000 per month in those credits.
After the new transmission line is completed, a second transition period would gradually phase out other prior benefits of the TPA over a period of an additional four years. This would allow OPD time to adjust to the changes in its transmission costs. After that, the OPD would be brought up fully to current existing regulation and would have the same status as any other NV Energy transmission customer. “I am excited about this agreement!” said OPD Board Chairwoman Judy Metz. “It will resolve issues that have arisen around our transmission costs and we will get the additional transmission line bringing redundancy to the system. I am all for having that redundancy and having that backup into our system.”
The Board’s approval of the agreement is not the final step in its implementation. The agreement is still subject to review by the Public Utilities Commission of Nevada (PUCN) and the Federal Energy Regulatory Commission (FERC). In addition, filings must be made to the Bureau of Land Management for the rights of way to build the new transmission line.