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Electrical District No. 3

Electrical District No. 3 is in the middle of a scheduled power outage in Rancho El Dorado to replace a switch.

General Foreman Evan McCullough said a switch failed last week, involving infrastructure in the north section of the subdivision. ED3 delayed repairs until today, during Spring Break, with more likelihood of families being out of town.

The work was also delayed an hour this morning when two ED3 employees called in sick and the company had to pull others out of safety training to cover the work.

McCullough said though ED3 set aside six hours for the outage, power could be back up by 2 p.m. or earlier.

An estimated 315 customers are affected.

Electricity rates will be going down in January for those on the ED3 grid.

Electrical District No. 3 will lower its rates by 5.16 percent starting in January.

The announcement came after the ED3 board of directors approved its 2016 budget Wednesday.

“We’re excited about it,” said General Manager William Stacy.

Stacy said the rate change will affect residential, commercial, agricultural and small industrial. There was one large industrial customer that had its rate reduced a year ago that is unaffected by the new rate.

He said ED3 had not raised rates since 2008 and will now have rates 7.9 percent lower than Arizona Public Service.

“We had some of our projects completed, like a 500 kV transmission line that runs through here,” Stacy said. “We have a transmission agreement with APS, and that will lower transmission costs.”

A new contract with Salt River Project and the 2014 formation of the Southwest Public Power Agency, providing additional power resources, also was an economic benefit. “And we wanted to pass that onto the customers,” Stacy said.

Growth is also helping ED3. Subdivisions are filling in, and Stacy said the company hooks up 25 new customers a month.

“The rates should stay steady for the next few years,” he said.

When the new rates go into effect in January, ED3 will be celebrating its 90th anniversary.

Public Works Director Bill Fay has been looking for ways to bring the stalled Edison Road extension into budget. The extension will be the access to the planned Estrella Gin Business Park. Photo by Adam Wolfe

By Adam Wolfe
@Adam_Wolfe

The project to extend Edison Road from Firehouse 575 to State Route 238 is still moving forward, but at half the size.

“We designed what we wanted, and the scope came back at $6.5 million,” Public Works Director Bill Fay said. “The program was created a long time ago without much of a scope, and was estimated for $3 million. We also thought Global Water would be helping with the costs, but that’s not the case.”

The original plan was for Edison Road to feature four lanes accessing the future Estrella Gin Business Park while providing an alternative connection between SR 238 and SR 347. The initial $3 million estimate was set by a program, and Fay said current officials are unsure where the number originated.

However, due to a the change in cost estimates and stalled negotiations among the city, Global Water and neighboring landowners, the project will move forward as a two-lane road.

“We always intended for Edison to reach the 238,” Fay said. “The issue is whether or not the utility lines will reach that far.”

If the city moved forward with its plan to build a four-lane road, there is a high likelihood it would have to tear up the road later to insert the utility lines, he said.

According to Mayor Christian Price, the construction companies aren’t the only issue when it comes to negotiations. Both Global Water and landowners will have a say in the project details as well.

“The city only controls one-third of the project,” Price said. “Ongoing negotiations between us, Global Water and private landowners will help shape the cost estimate. Some assumptions were made when the project started, but in a five- to 10-year projection, you work through stages of development.”

Jason Thuneman, director of the project management office for Global Water, said the city is responsible for constructing on-site water and wastewater utility lines. Lines under a four-lane road to SR 238 would have to extend the full length of the roadway, he said.

“ If the City decides to proceed with only a two-lane roadway at this time, water and wastewater line extensions can be completed in the future at the same time the additional lanes are installed since the infrastructure under this roadway is not necessary until the property north of Estrella Gin is ready to develop and requires service,” Thuneman said.

The city bought the Estrella Gin property for $3.2 million in 2011 and paid almost $48,000 for a feasibility study for a business park. The new fire station is already on the property, a Public Works building is being constructed, and the Amtrak station will be moved to the site.

“Global’s role with respect to Estrella Gin was to extend  water and wastewater to the property line, which was completed in 2011, prior to construction of the Estrella Gin Fire Station,” Thuneman said.

Last year, the city received a $250,000 Rural Economic Development Grant from the Arizona Commerce Authority to help extend Edison and access future businesses and facilities. There are 40 acres available for business development.

The change in the extension for Edison Road creates potential problems for the development of business in the area. The Estrella Gin Business Park has already seen significant delays.

“We originally wanted to purchase our own land and build, but we had meetings with [members of the city government] and the development company regarding space in Estrella Gin,” Shipfr8 Chief Operating Officer Peter Cockle said. “They told us they would break ground and even provided opening dates. Those dates have since come and gone.”

Cockle, who has lived in Maricopa for the last seven years, was expecting to be in his new business location by January 2014. His hope is to provide jobs to Maricopa residents and boost the local economy, but his inability to get into a permanent location is making that goal hard to achieve. The delays have forced Cockle to consider moving his business to accommodating cities.

“Realistically for a business to develop, it has to be outside of Maricopa,” Cockle said. “There just isn’t business space readily available. Mayor Price has been a tremendous supporter for us, but what happens when he leaves office? Businesses that want to develop in Maricopa may have to look to cities such as Casa Grande and Gilbert that have the space already created.”

Cockle feels developing businesses are unable to make proper plans in Maricopa due to lack of adequate business-ready space. Maricopa has plenty of space for potential development, but few business parks are “move-in ready.” Projects such as the Edison Road extension will help address the issue, but the project’s unknown completion date doesn’t address the immediate need, he said.

The city’s need is access to the property.

Until utility lines reach SR 238, it is fiscally irresponsible to build four lanes in case they need to be torn up to place the lines, Price said.

“[Edison] Road will connect to the 238, but we want to make sure we do it right,” Price said. “If [Edison] is going to be developed, utilities have to be put in. I’d rather do it right the first time. We don’t want to build the road just to tear it back up later.”

Electrical District No. 3 is prepping a 12,000-volt line extension on Edison Road to SR 238. ED3 Director of Engineering and Operations Larry Yates said a preliminary design has been submitted to the city for review.

ED3 completed the new service extension to the fire station and has a construction agreement for the Public Works building. The utility is also working on a power line conflict review for the relocation of the Amtrak station to the Estrella Gin site.

“One advantage the city has that should have a positive marketing impact for the Estrella Business Park  is there are 12,000-volt three-phase primary lines installed around the perimeter of the property, with the power line extension that is being designed for the Edison Road Project, which should add significant value to the property as it could lower the cost for electric service,” Yates said.

ED3 itself owns a small parcel of land adjoining the south side of the business park. Yates said with the final design unknown, “it is difficult to determine if that property will have any positive or negative impact for ED3.”

Last year, the city received a $250,000 Rural Economic Development Grant from the Arizona Commerce Authority to help extend Edison and access future businesses and facilities. There are 40 acres available for business development, but that development has stalled with the road extension.

Despite the monetary setback, Fay is confident the extension will be completed. For that to happen, the project design had to change.

“With construction companies, you can either tell them what you want and they can tell you what it costs, or you can tell them what you can spend and they’ll tell you what you can get,” Fay said. “We are going to have a through-road from the firehouse to Highway 238, but we don’t know if the needed utility lines will reach that far.”

The project is moving forward but starting small.

“Four lanes would be ideal, but that may not happen right away,” City Manager Gregory Rose said. “We believe it will be two lanes (as a start). This allows us to add the utility lines and two extra lanes later.”

By cutting two lanes off the initial design, the city is able to save money on the project as well, though the cost may still be higher than original estimates.

According to Rose, the only project the city is planning to allocate funds from to help pay for the road is a “right-of-way improvement bill” for City Hall.

“The [right-of-way] project was a low priority,” Fay said. “It may not have happened for a few years anyway, so allocating the money should not have any effect.”

The extra money should allow the city to move forward with the Edison project. Negotiations will continue with Global Water and landowners to make the four-lane expansion happen, but even if the “ideal” expansion is delayed, the city intends to complete it.

“We don’t necessarily have a backup plan for the project,” Price said. “It’s all about prioritizing the priorities. We’ll make adjustments at each stage of the design, but we are going to build all the way to the 238.”

It’s unclear at this time where the city will find more budget cuts if needed for the project. However, Fay and his team will be looking into all of their options at each stage of the design.

“We are making adjustments everywhere we can,” Fay said. “We have a history of finishing projects on time and under budget. It’s not completely clear, but we’ll find out how much it’ll cost and how much (funding) we have.”

The Edison Road extension was initially planned as a four-lane road, but new plans will build it as two lanes until utilities go in.  Photo by Raquel Hendrickson
The Edison Road extension was initially planned as a four-lane road, but new plans will build it as two lanes until utilities go in. Photo by Raquel Hendrickson
A fire station is at the end of Edison Road, and a Public Works is under construction on its west side. Estrella Gin Business Park is to go in on the north side. Photo by Michael Barnes
A fire station is at the end of Edison Road, and a Public Works is under construction on its west side. Estrella Gin Business Park is to go in on the north side. Photo by Michael Barnes

ED3 General Manager Bill Stacy took a lot of questions from Maricopa City Council during his explanation of the solar policy. Photos by Raquel Hendrickson

By Raquel Hendrickson

Three weeks after Electrical District No. 3’s new solar policy went into effect, General Manager William Stacy took some tough questions from the Maricopa City Council.

“We’re not looking to recover lost revenue,” Stacy said. “We’re just looking at recovering some of our fixed costs.”

Stacy gave a presentation on ED3’s “Distributed Energy Generation” (DG) policy during a work session Tuesday. Stacy’s explanation was frequently met with responses from council members that they “still don’t understand” or were “still confused.”

The utility and its rates are outside the jurisdiction of the city council. It is a nonprofit run by a board of directors.

Stacy previously brought the solar policy to the council during the Call to the Public section of a regular meeting May 27. That was when he announced an increase in the DG fixed cost rate from 70 cents to $3 per kilowatt hour for all new solar installations.

“There are a lot of claims out there that people think electrical companies are trying to kill solar,” Mayor Christian Price said.

Fixed costs pay for debt service, contracts, maintenance and depreciation along with the variables in energy use, labor and operations. They are costs “everybody has to pay” to maintain the system, Stacy said.

The recent jump in the number of solar customers created ED3’s concerns over the rate impact, power quality and reliability, and employee safety. ED3 has twice as many solar customers as other utilities in the state , based on percentage. He said 6.9 percent are on solar.

Stacy said ED3 has no intention of being an “alpha” leader in solar energy. “We like to be beta testers. We like to be second generation, that we know it’s going to work and not have problems.”

He said ED3 was “trying to be fair with everybody, including the solar companies” when it put its policy together. Solar customers, he said, need to pay their fair share of the fixed costs.

The loss of those fixed costs amounts to about $730 per solar customer. Those solar customers now number 1,397, making the estimated loss for ED3 more than $1 million a year, Stacy said.

He said non-solar customers are having to make up the difference.

As a solar customer, Price said he wanted to understand why his system would still be considered to have the same impact on the grid. Price said going solar was a financial decision on his part.

“I’m using less, therefore I’m clearly paying less,” he said.

Stacy confirmed that, showing the average non-solar customer using 1,545 kilowatt hours per month and a solar customer using 491 kWh. But they are similar in “demand.” Non-solar customers have 8.9 kilowatts of demand compared to solar customers’ 8.5.

“When it gets dark, they’re totally on the ED3 system,” he said.

Price said he was voicing the question of many people when he asked, “If I’m using so much less, why is demand not that great of a differential?”

Stacy said solar customers still use ED3 infrastructure – transformers, transmission lines, substations and generators – and solar only offsets electricity use in the daytime until about 4 or 5 p.m.

At night, he said, “We still have that demand on the system.” Residential rates do not have a demand charge at ED3. Salt River Project has an upfront demand charge on its bills, but Stacy said ED3 did not want to try that.

“We capture all of our fixed costs in the energy charges,” he said.

“I don’t think anyone would disagree there’s a cost to doing business, but by the same token we have a cost to manage our homes as well,” Councilmember Henry Wade said.

Councilmember Nancy Smith, who is not a solar customer, questioned the two other streams of revenue besides customer billing. She said potential solar customers have asked her why the two line-items on the property tax are not sufficient for the fixed cost recovery.

Smith said there was an operation and maintenance (O&M) tax and an O&M fee on the bill. Stacy called that a variable cost.

“I’m still struggling with that,” Smith said. “It seems to me O&M should be spread across evenly to all residents, and if the property tax is the way to do that, that seems like it makes more sense.”

The revenue from the tax levy does not cover all the O&M, Stacy said.

With solar generation systems having an expected lifespan of 20-25 years, Stacy said he was worried about inverters and automatic disconnects failing over time. He said the latter could cause backfeed on the line and endanger crews working on the lines.

ED3 has six power contracts. It buys “several million kilowatt hours” on the market each month, Stacy said.

“When a solar generator generates in excess, they’re really reducing the amount that we buy on the market,” he said. “The average price of that is 2.6 cents.”

That is credited as an “avoided energy cost rate.” He said the ED3 board of directors will review the rate every year.

Wade pointed to ED3’s new limit of 30 solar installations allowed per month, asking how the utility came up with that figure when the average over the past 19 months has been 40.

“We just tried to pick a number,” Stacey said. “That’s 360 a year.”

ED3 is capable of doubling its capacity for overall electric service, but Stacy repeatedly used the phrase “new paradigm” to describe the solar movement. He said utilities across the country have unanswered questions about how to deal with it and what its long-range impact will be.