“We certainly hope it’s going to be better,” said Virgil Hobbs, the assistant administrator for finance and marketing for the Southeastern Power Administration.
That U.S. Department of Energy agency, based in Elberton, Ga., sells electricity to 491 customers – mostly rural electric cooperatives and small municipalities – in 10 states.
In wet years, contracts are easy to fulfill. During droughts, when falling water levels reduce production, the agency must purchase alternative power elsewhere to fulfill its contracts.
During fiscal year 2012, the agency spent $7.6 million in peak replacement energy. Those costs are expected to be much lower for the remainder of fiscal 2013 and into fiscal 2014.
“We would prefer not purchasing any off-system power and have our customers getting all the power from inflows and the river,” Hobbs said. “But we do purchase power because, with a drought, and working with the corps under their Drought Contingency Plan, we stay within the releases they provide us.”
The corps’ drought plan requires incrementally lower releases from dams as lake levels fall, which can reduce power production and shift the priorities for the available water.
Thurmond Lake, for example, has “authorized purposes” that include flood control, navigation, hydropower, recreation and fish and wildlife – in addition to providing drinking water and maintaining sufficient river flow to assimilate industrial and municipal wastewater.
As reservoir levels fall and releases are reduced, water supply and water quality rise to the top of the priority list.
Thurmond Lake has risen more than 10 feet since Jan. 1, and is currently at its highest levels in 18 months, with forecasts calling for continued recovery.
“It’s anybody’s guess what the weather is going to do, but if you look at trends, even if we have a bad water year in 2014, because of lower natural gas prices we would expect to spend less on alternate power,” he said.
Although 2012 was a significant drought year, the cost of replacement power was nowhere near the high of $41 million spent in 2008, the height of the most recent “drought of record.”
The hardships of low water that bring complaints from homeowners, recreation interests and real estate brokers also affect SEPA’s power customers.
“Through recent droughts, since October of 2005, federal hydropower customers have spent $282 million above and beyond their contract rates to support higher lake levels in the Savannah River Basin,” Hobbs said. “Hydropower customer interests are no different from recreation proponents, shoreline homeowners and environmental advocates. We all want to keep reservoir elevations high.”