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IID board seeking other energy options

May 03, 2001|By KELLY GRANT, Staff Writer

The Imperial Irrigation District Board of Directors will be looking at various options to secure natural gas for its electricity generators after its bid in a gas well field was declined this week.

Board President Andy Horne said while the board has contracted gas service through September, the IID directors don't want to wait until the last minute to decide how to bring gas to IID's power plants at the contract's end.

The board gathered information about several options while researching the bid on an interest in a natural gas well field in Durango, Colo. Though the bid wasn't accepted, the information is useful in obtaining gas by other means.

Horne said IID's various options include buying natural gas on the spot market, signing a longer-term contract to buy gas from a supplier, buying an interest in a gas resource like the well field in Colorado or some combination of all three options.

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A diversification of sources may work to IID's advantage, Horne said.

Throughout the year, IID requires varying amounts of gas each month. IID uses little gas during the winter but requires large amounts during hot summer months when electricity use peaks in Imperial Valley.

A contract to provide IID with a base amount of gas throughout the year combined with spot market purchases for times when more gas is required, as in the summer, would prevent the high-capacity charges Southern California Gas Co. wants to impose on IID even when IID uses less capacity.

Southern California Gas Co. transports IID's gas supply within the state.

Having an interest in a gas well field could protect IID from high prices on the spot market.

For years the spot market was a cheap and stable way to purchase natural gas until last November when prices jumped dramatically and quickly. Since then, prices have fluctuated, making IID wary of relying on the spot market.

As of last week, natural gas prices were $13-$14 per million BTU on the spot market, Horne said. IID's contract has a locked-in price of $7.90 per million BTU.

When signing contracts, IID risks agreeing to a price that may one day be higher than the daily fluctuating spot market. On the other hand, not fixing a contracted price would leave IID at the mercy of possible high spot market costs.

"We're not in a panic, necessarily, because we have a contract through September," Horne said.

Securing gas is not a problem, Horne added.

"It's possible to sign a contract in one week," Horne said. "The gas is there; it's just a matter of price."

While the board has looked at two contract possibilities of five-and 10-year terms, Horne said IID is not limited to those options.

"It doesn't mean we couldn't sign a two-year contract," Horne said.

For now, the board will continue to examine its options, Horne said. It will watch spot market trends and take recommendations from IID staff and consultants before making any decisions.

Staff Writer Kelly Grant can be reached at 337-3441.

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