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IID board considers bidding on gas field

April 12, 2001|By DARREN SIMON, Staff Writer

Spurred by the rising cost of natural gas, the fuel source for the Imperial Irrigation District power plants, the district board this week announced its interest in investing in a gas well field.

For the first time during a board meeting, directors shared information about the efforts they have extended to determine whether purchasing a well field is the best way to meet IID's natural gas needs.

While the board did not give specific details, it did say time is short and the district needs to bid on a well field by the month's end.

That means the directors will have to decide in a vote during its next meeting whether to submit such a bid. If the board does invest in a well field, the district would become its own natural gas supplier.

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Board President Andy Horne said it will cost hundreds of millions of dollars to invest in such a field.

IID officials said they do have a well field in mind but cannot divulge much detail about it because it could affect the bidding process.

The idea has been a topic of closed-session discussions for weeks.

IID officials told those gathered in the district auditorium in El Centro that IID is looking at all possible options to control power costs. They said that is at the center of the idea to invest in a well field.

IID General Manager Jesse Silva said the concern over the cost of producing power has been driven by the natural gas market going through violent fluctuations in recent months.

A year ago IID was paying just over $2 per million BTU for natural gas. In recent months the cost of natural gas has risen as high as $50 per million BTU. IID officials have said at that price the cost of power would undergo severe increases.

To offset that, the district has locked in a price with a natural gas supplier of $7.90 per million BTU for the summer.

At that price, nearly three times higher than last year's, there likely will be power bill hikes this summer.

IID officials say the cost of natural gas will be about $48 million this year. However, the contract with the supplier ends in September, and IID officials are concerned about the cost the district will face then and what that will mean for power bills.

For the IID board to approve submitting a bid for a well field, it would mean the board would need to know that action would lead to decreased costs for natural gas.

IID would have to pursue bonds to invest hundreds of millions in a well field and would face annual bond payments.

During Tuesday's meeting members of the public, including one former IID director, urged the board to be cautious. They also expressed concern that the board is moving quickly when there has been little public discussion.

Horne said he realizes the issue is moving quickly.

"It is a time-sensitive deal and there is a short fuse," Horne said.

Don Cox, who recently ended a long tenure as an IID director, told the board it is acting under a crisis situation. He said the board needs to remember that crises do not last.

"You are politically sticking your necks out if you have to borrow hundreds of millions of dollars," Cox said.

Shorty Hickingbottom, president of the district power consumers advisory committee, and Gil Perez, a member of that committee and president of the United Taxpayers Association, said there needs to be more public information available.

Board members responded they are releasing as much public information as they can. They added while they have to make a decision quickly, they will do so cautiously.

Staff Writer Darren Simon can be reached at 337-4082.

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