SMUD OKs $1B Budget and Digester Gas Deal

By Published On: December 11, 2009

The Sacramento Municipal Utility District board approved a $1.43 billion 2010 budget blueprint December 3. The muni also signed off on a 20-year agreement to buy up to 7,000 MMBtu/day of gas from a digester project in Colorado to fuel a 1,000 MW power plant about 25 miles southeast of Sacramento. The upcoming budget sets aside $1.06 billion for operations and maintenance during the year, plus a capital budget of $198.8 million. “The operating budget for 2010 will be on a par with this year because of business unit cuts to offset higher costs from regulatory fees, medical benefits and corporate insurance,” said board member Genevieve Shiroma. SMUD’s 2009 budget was $1.51 billion. The upcoming spending plan also includes $166.8 million for debt service and $193.3 million for multi-year capital. The budget limits total spending to about $1.43 billion. Among the cuts will be the elimination of “almost 200 mostly vacant positions” at the muni, Shiroma said. In other news, SMUD unanimously approved an agreement with project developers, Colorado Green LLC, under which it is to deliver gas into the Kern River interstate pipeline system at Opal, Wyoming. SMUD has pipeline capacity from that point to its Cosumnes Power Plant, a combined-cycle natural gas facility. The estimated annual cost of the gas would be $18.25 million. Digester gas is produced from a wastewater treatment. The project is expected to be implemented in 2011. “The contract meets the California Energy Commission’s renewable portfolio standards and results in a net zero greenhouse gas,” said board member Renee Nunes Taylor. The expected capacity is 300 MW per year. The base price under contract is $10/MMBtu. However, the deal allows that if the cost of conventional, non-renewable gas exceeds $10/MMBtu, then the price will be the monthly index price, up to a maximum of $14/MMBtu. The volume is expected to range between 3,000 and 7,000 MMBtu/day. A more definitive range would be set after the project’s completion. The range of gas supply is expected to result in about 155 GWh to 365 GWh annually toward district renewable energy targets. SMUD also has a one-time option, under the same terms, to buy gas volumes that exceed 7,000 MMBtu/day.

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