SMUD Approves New Mexico Pipeline Contracts

By Published On: September 18, 2009

The Sacramento Municipal Utility District’s Board of Directors this week approved a 20-year, $43 million renewal of a cluster of contracts related to transporting natural gas to Sacramento from New Mexico. The renewals were SMUD contracts with Transwestern Pipeline to support delivery of the muni’s Rosa gas reserves in New Mexico to SMUD power plants in Sacramento. Three of the contracts were up for renewal and were extended so that all would have common expiration dates. The contracts were renewed through January 31, 2030, at a total cost of $2.15 million annually. SMUD officials say the muni considered contracting with another company, El Paso Transportation, but went with Transwestern due to its lower rates and higher capacity. “This is a transaction where we were able to acquire access to these gas fields several years ago,” board member Bill Slayton said. "We know now this was a very good transaction on behalf of the ratepayers in Sacramento.” The utility runs gas-fired power plants. And at its September 3 meeting, the SMUD board voted to authorize a $5 million increase to a contract with Silver Springs Networks for the purchase of infrastructure for the upcoming installation of “smart” energy meters. The increase brings the $8.15 million contract to one not-to-exceed amount of $13.15 million. “The agreement allows the general manager the flexibility of deciding how much of the management of [advanced meters] will be taken in-house in future years,” board member Larry Carr, who’s chair of the board’s finance committee, said. “The increase provides funding should SMUD exercise the in-house option.” But the vote was not unanimous: board member Renee Taylor was absent and member Rob Kerth cast a “no” vote. “I think the staff has probably made a very good proposal here and the staff work behind it is good,” Kerth said. “The reason I would like to record a ‘no’ vote on this is I’m not yet comfortable with security and the data protection systems that are in place here” with the smart metering system. “It could be that they’re great and I just don’t understand it yet, but if in doubt, vote no. And so that’s what I’m doing.”

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