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PUD plans to bill Calpine soon for transmission line

Klickitat utility expects to get paid for work done on 10-mile line.

Having completed its share of the work, the Klickitat Public Utility District expects to begin getting paid soon for construction of a 10-mile, 230-KV transmission line and power substation.

The PUD project was designed to transmit power from the still uncompleted Goldendale Energy Center plant in Goldendale to a Bonneville Power Administration substation near John Day Dam and the Goldendale Aluminum Co. complex.

The 248-megawatt natural gas-fired power plant in Goldendale is being built by Calpine Corp., a Houston, Texas-based energy generation firm that "builds, develops, and operates modern energy centers."

A dedication of the line and the accompanying E.E. Clouse Substation is planned for June 13, and with the line work completed, Brian Skeahan, manager of the PUD, said the PUD plans to send its first bill.

It's a big bill: PUD officials say the line and substation construction cost about $8.5 million, including materials and labor costs.

"The line is energized and available for use," Skeahan explained. "It's like a water line full of water, but with the valve closed. We're going to bill them relatively soon, later on this summer, and I expect to get paid. The line is done and available, and it was obviously done before the power plant was completed."

The plant was originally scheduled to be finished by July 1, but Calpine slowed construction and the contractor building the plant laid off 120 of its workers on Feb. 1.

Rob Lamkin, vice president of Calpine, said construction activities at the plant would be adjusted "based on how the development issues resolve."

Steve Royall, Calpine's plant manager for the Goldendale project, said the plant was still moving forward.

"We've not set an official completion date as of yet," Royall said. "We have about 165 construction workers on site. We have some issues we're trying to work through, but we're making progress every day."

Lamkin added that now that the PUD's transmission line is finished, it will be possible for Calpine to determine a new on-line date for the plant.

"Without the interconnect, we couldn't complete our project," Lamkin said. "I fully expect that by the end of the month [June] we'll know our new on-line date."

Lamkin noted that the PUD's transmission line project was originally supposed to be completed in January of 2002.

"We're glad it's done, but the problem is, it's seven months late, and them being seven months late causes a slip in us being able to bring the project on line," Lamkin said.

According to Skeahan, however, the PUD's transmission line and substation were scheduled for completion by July 1, and, despite one significant complication, the PUD met its target date with several weeks to spare.

Completion of the transmission line had been held up temporarily earlier this year due to snags regarding a final one mile easement across property owned by the Goldendale Aluminum Co. (GAC).

Those concerns are apparently still being ironed out, but the line is in place.

"We had a verbal agreement from GAC, essentially saying `go ahead and finish it, and we'll work out the details later.' The work is done, but we're still discussing terms of the easement, and nothing has been signed yet," said Skeahan.

In a May 17 letter to Steve Royall, Skeahan reminded Calpine officers that an invoice will be in the mail soon.

"The first invoice for transmission service will be for July 2002," Skeahan wrote. "In that we do not expect to have final financial closeout complete prior to issuance of the first bill, the initial bill will be one-twelfth of the minimum capacity charge of $1.35 million. It is my understanding that subsequent billings allow for adjustments to reflect actual costs. Finally, I have not yet heard of a revised estimate or targeted completion date for the project. Should you have a date, I would appreciate being made so aware."

Lamkin said he expected Calpine to pay the bills, although he pointed out that he did not believe Calpine was obligated to do so.

"Contractually, we probably don't have an obligation to pay that bill, but I anticipate paying it. Calpine is a good company that prides itself on being a solid member of the community," he explained. "Even though KPUD was six to seven months late, I'll probably go ahead and pay the bill. That's how we like to do business."

The power plant project may have been complicated by the fact that the region's aluminum plants -- big consumers of electricity -- have been operating at reduced capacity. The production of primary aluminum at the Golden Northwest smelter and much of the Goldendale smelter has been curtailed since January 2001, under an agreement with the BPA that kept the company's electric loads curtailed in return for sufficient funds to continue paying its employees full wages and benefits.

The plants are not likely to restart until September at the earliest.

With the aluminum plants not currently in the picture, it remains unclear where the Goldendale power plant's energy would go.

"They haven't put together any long-term firm contracts yet, and absent that, maybe they will just go into the day market and whoever buys it, buys it," Skeahan said.

However, Lamkin said the power outlook remains grim.

"There is still a dire need for energy supply in the West," he said.


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