On a 3-2 vote Monday, the El Dorado Irrigation District Board of Directors just made it under the wire to approve an interconnection agreement with PG&E.
The deadline was March 14 and the board acted March 10, after having already heard a presentation Feb. 24. The two-step process had been ordered by Board President Alan Day, who wanted a presentation and then be allowed to wait two weeks to for another presentation, which would be acted upon.
The interconnection agreement is for a mini-hydroelectric project that would replace a pump in the water line at Water Tank 7 near El Dorado Hills with a hydroelectric generator. The engineering staff described the mini-hydro generator as a pump in reverse.
The interconnection agreement will cost EID $170,000, which will be paid out to PG&E on a monthly basis as work progresses. The payment is for design, engineering, construction and taxes. The 30-year deal has an automatic annual renewal but EID can back out with 20 days notice.
Once power is transmitted, EID will have to pay PG&E $782 monthly. However, the net income from power sales will be $4 million under one power sales method or $2 million under a different power sales method. Those figures are without the already incurred costs. Those costs were $400,000 approved in May 2013 for Inline Energy of El Dorado Hills to engineer a variable speed turbine. The El Dorado County Water Agency funded $182,000 of that. Additional capitalized staff time of $150,000 was budgeted for this project.
The payback period is 13-14 years under one power sales method and 18-19 years under another.
The board will be asked to fund construction sometime during the summer.
With a Proposition 84 grant, the net capital cost of the project is $1.14 million.
“This is exactly the project we need to maintain our rates,” said Director Dale Coco. “The second largest cost of operation is energy.”
“It’s analogous to the solar plant at El Dorado Hills. It saves us $300,000 a year (in sewer plant energy expenses),” said Director George Osborne.
“The math on this is too extended,” said Director Greg Prada. “When you have 135 projects, this is at the bottom.”
Coco pointed out that the solar project was paid off in eight years instead of the original estimate of 13-15 years.
“The cash flow is pretty thin,” said Board President Alan Day. “Over 15 to 20 years something is going to happen. Could we pay down that 5 1/4 bond? Could we use it to pay the Main Ditch (piping)?”
“We’re replacing an asset that produces absolutely nothing with something that produces revenue,” said Coco.
Coco, Osborne and Director Bill George voted for the interconnection agreement and Prada and Day voted no.