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Adapting Together: The Strength of Collaboration in a Changing Environment

"Electric utilities in California are under immense pressure from policymakers and the general public to recalibrate their focus on safety and reliability, yet at the same time, we are looking toward a carbon-neutral future."

With wildfires and Public Safety Power Shut-offs affecting both our agency’s employees and facilities as well as our members’ communities in 2019, we are reminded that we must be working together to prepare for emergencies and plan for a more resilient system.

In late October, the Kincade Fire came within less than a mile of our Geysers geothermal facilities. Given the evacuations for our facility, many of our employees’ homes, and our member community, the City of Healdsburg, we remain extremely grateful for the tireless work of our staff, CAL FIRE, local officials, and numerous others in helping keep everyone out of harm’s way. We are fortunate that the plants came out of the incident unscathed, with very minimal damage and no significant repairs to the facilities needed to bring generation back online.

Ultimately, one of our geothermal plants resumed normal generation operations after being out for nearly two weeks while firefighters responded to the fire. However, our second plant remains offline, despite being generation-ready, as Pacific Gas & Electric continues maintenance of the transmission line that brings power out of the facility.

We remain committed to supporting our members in these efforts and, despite these challenges, were able to achieve several notable accomplishments across the agency this year.

Our power management team supplied high-quality services to non-member customers, resulting in approximately $2.2 million in revenues. These revenues are credited to the members to offset their costs associated with NCPA services and increase the overall value of service offerings.

As well, operating as a Load-Following Membered Subsystem, we successfully balanced the members’ portfolio during 98% of all hours in the 2019 fiscal year. This resulted in significant savings achieved through avoided costs and direct savings for members.

NCPA played a key role in a natural gas transmission agreement that will ensure the market viability of the Lodi Energy Center, as well as our members’ natural gas units.

We completed major projects at our facilities to ensure the reliability of our generation, including a generator rewind at our hydropower plant, and major overhauls of units one and two of our geothermal project.

We refunded the 2010 hydroelectric Series A bonds, generating $3.6 million of net present value savings (approximately $1.6 million annually) for project participants.

We had a number of discussions with credit rating agencies regarding wildfire exposure and liabilities. NCPA’s rating remains unchanged as a result of those conversations and the robust wildfire mitigation measures implemented at our facilities, at a time when California’s electric utilities’ practices have been under intense scrutiny and several utilities in the state had rating downgrades or were put on “negative watch” due to wildfire liability risks.

We also rolled out an expanded risk management report app to provide on-demand feedback on open position, mark-to-market, and credit risk exposure.

In the Legislative and Regulatory realm, NCPA made significant strides in its efforts to protect members’ interests in federal hydropower resources. We received a favorable opinion regarding our Central Valley Project Improvement Act lawsuit, actively participated in the process to complete the cost allocation study, and secured termination provisions in the thirty-year 2025 base resource contracts—all of which could result in long-term financial savings for NCPA members.

As well, NCPA staff created a new process through which NCPA will be able to aggregate and sell Low Carbon Fuel Standard program credits on behalf of members. This development creates a pathway for members to increase revenues to be reinvested in transportation initiatives and could result in savings on administrative costs.

"In a rapidly changing business environment, we stand ready to adapt to the needs of our members and their local communities."

NCPA helped members navigate the operational and policy challenges associated with wildfires and the utility sector. We successfully advocated at the regulatory agencies and Capitol to promote policies intended to significantly mitigate the impacts on NCPA member communities when PG&E de-energizes its transmission system during Public safety Power Shut-offs. We also implemented a competitive solicitation process to secure multiple firms to provide independent, technical evaluations of NCPA and member wildfire mitigation plans.

In a rapidly changing business environment, we stand ready to adapt to the needs of our members and their local communities. As has been the case for decades, NCPA will seek new ways to support our members in providing safe, reliable, and affordable energy to their community members. Now, in the face of significant hurdles for our state’s investor-owned utilities, the benefits of public power and joint action shine brightly.

Financials

NCPA_Financials.pdf
Reports on Audit of Combined Financial Statements — For the Years Ended June 30, 2019 and 2018
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