VEA considers leasing 7000 solar-powered water heaters

Solar energy was at the forefront of the discussion when the Valley Electric Association board of directors held their monthly meeting Friday.

The board reviewed bids for the purchase and installation of 7,000 solar-powered hot water heaters in members' homes. They also discussed fees to charge solar power companies wanting to use their new power line connecting with NV Energy.

Valley Electric received permits from the U.S. Bureau of Land Management to construct the 230 kilovolt line earlier this year, after almost 10 years. The line was promoted as providing a backup to any power problems, like the outage on Jan. 14, 2007, caused by damage to a power line between Sandy Valley and Goodsprings. But the $30 million line extension was one of the factors VEA blamed for a 7.47 percent rate hike that was later scrapped.

The line extension is now on hold while NV Energy completes the permitting on the other end.

A yearly point-to-point transmission tariff of $9 per kilowatt was proposed for possible usage of the line by solar power plants that may come on line in Amargosa Valley. That translates to a monthly rate of 75 cents per kilowatt or 17.3 cents per week.

Valley Electric Association Chief Executive Officer Tom Husted said that's for firm capacity on that line, meaning the company can't get bumped by another use.

One company, Solar Millenium, is optimistic they could get permitted by the BLM to start construction next year on two 250 megawatt concentrated solar power plants in Amargosa Valley and complete them by 2013.

Husted said Valley Electric charges half the rate NV Energy would charge. He said the cooperative doesn't pay a federal income tax, as they don't make a profit, only a margin that's returned to the members.

"There are some very attractive financial reasons to interconnect with our system versus somebody else," Husted said.

VEA Finance Manager Brian Fickett said he factored in depreciation of the line, $600,000 per year over 30 years and an annual interest on the debt of $1.9 million.

"If they were to reserve $9 per kilowatt per year, for a 250 megawatt plant, that would be $2.2 million revenue to Valley (Electric)," Fickett said, quoting annual figures.

VEA board member David Dawson was concerned the solar plants may overtax that power line. Husted said the cooperative can manage its resources with contracts in real time.

"It could also mean we could be expanding that line," Husted said.

VEA Operations Manager Robby Hamlin designed the line extension to be expanded easily from handling 400 megawatts to 1,600 megawatts, he said.

Husted said any solar power companies will have to be a member of the cooperative. He added afterwards, Corrections Corporation of America, builders of the federal detention center, recently became a member.

There are also projects on the drawing board for a north-south tie-in of the power system between Northern and Southern Nevada. VEA Power Resources Manager Terry Stagg said that could allow Southern Nevada users to draw power from the north in the summer when its needed to power air-conditioners and in the winter, when demand is higher up north, send it back.

Husted said the board may have to hold a two-day meeting in June to discuss the domestic solar hot water heating program.

Fickett said there's five different packages under consideration, depending on factors like whether a person has a modular or stick-built home and the size of the family.

"We're looking at about 7,000 units over the next two years that will be installed," he said.

The average residence uses 3,140 kilowatt hours per year to heat a hot water heater, Fickett said. The average household uses a total of 1,325 kilowatt hours per month of electricity, he said, or 15,900 kwh annually, meaning the hot water heater accounts for about 20 percent of the usage.

The lowest of two bids for the entire solar hot water heater program came in at $24 million.

The cooperative would apply for Clean Renewable Energy Bonds under the American Recovery and Reinvestment Act, also known as the stimulus package. Fickett said he was confident the bonds could be purchased through the National Rural Utilities Cooperative Finance Corp.

The application has to be submitted to the CFC by July 3, the CFC then sends the applications to the Treasury Department by Aug. 4. The Treasury Department then makes the decision by December, Husted said.

"Every one of CFC's applications has been accepted by the treasury in the past," Fickett told the board.

Newly elected board member Peter Gazsy said that would be 20 percent less power the cooperative would have to purchase.

"That's 20 percent less revenue, too," said board member Shelia Rau.

"At the same time what is the long term pricing of energy and we have to look more than a year or two down the road," Husted said. "Every home in this valley should have a solar hot water heater."

Rau had questions about the plan to lease the solar hot water heaters for $28.10 per month, but only saving them an estimated $26.40 in electricity.

Gazsy said the cost of electricity will eventually go up. Husted said after 12 years, the property owner would own the system.

"When you do your presentation I want to see bottomline numbers," Rau said.

She was concerned the cooperative may have to raise rates to borrow the money.

"Money is tight right now," Rau said.

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