FOR IMMEDIATE RELEASE: March 20, 2012
CONTACT: Randy Wilkerson, 970-962-7056, firstname.lastname@example.org
WESTERN ADMINISTRATOR HIGHLIGHTS ACCOMPLISHMENTS, SPENDING PRIORITIES
LAKEWOOD, Colo.—In testimony before the Energy and Water Subcommittee of the House Natural Resources Committee, Western Area Power Administration Administrator Tim Meeks focused on Western’s fiscal responsibility, strategic priorities and the FY 2014 budget request.
In prepared remarks, Meeks told the Subcommittee members, “We operate in a business-like manner, and we believe strongly in the principle that ‘the beneficiary pays.’ By this, we mean those entities that benefit from the use of these Federal resources must pay for the use of those resources.” He added, “Based on our history and mission, we have a strong culture of cost awareness and control throughout Western.”
In 2011, Western fine-tuned and updated its strategic plan and developed targets based on that plan. Meeks said the strategic plan, “ensure[s] we are aligned with DOE’s goals and working toward a sustainable, clean, reliable and secure energy future for our customers, the American people and future generations. Most importantly, we again reaffirmed our core mission remains marketing and delivering clean, renewable, reliable, cost-based Federal hydropower.”
Looking forward, Western is formalizing and strengthening its asset management program to better make risk-informed capital investment decisions, optimizing information technology data centers by standardizing hardware, software and processes, as well as consolidating data centers; and analyzing power system operations organization and processes. Meeks said, “a common thread works through each of these targets. Each is designed to make Western even more efficient, control costs and keep our rates as low as possible.”
Recognizing the increasing impact the development of intermittent, renewable energy sources is having and will continue to have in our balancing authorities, Western is exploring how an Energy Imbalance Market in the West might work to better accommodate those intermittent generation sources and the role Western might play in that market.
Western continues to facilitate renewable energy development through its Transmission Infrastructure Program, or TIP. Using Western’s borrowing authority, TIP committed funds to two additional projects in 2011, the TransWest Express and Electrical District No. 5 – Palo Verde Hub transmission projects. The Montana Alberta Tie Ltd. Project was the first project financed under Western’s borrowing authority in 2009.
The TransWest Express Project would deliver Wyoming’s world-class wind energy resources to population centers that need renewable energy in states such as California, Arizona, and Nevada. In addition, the line would provide important electricity capacity, reliability, and stability for the Western Interconnection.
The Electrical District No. 5 – Palo Verde Hub Project represents the first partnership with one of Western’s existing Federal power projects to develop transmission infrastructure and facilities to further renewable resource development. It will provide a path to and from the very active energy marketplace at the Palo Verde Hub to the Electrical District No. 5 Substation, south of Phoenix, to facilitate the delivery of emerging renewable resources in the area to both customers and markets.
While the Montana Alberta Tie Ltd. Project encountered a number of challenges that impacted the project schedule and total project cost, Western’s obligation has not increased, and no additional taxpayer funds are at risk. The project developer has resumed construction, a transmission service agreement is in place with a wind energy developer and that developer has begun construction of its wind farm.
Meeks addressed the November 2011 Inspector General’s report on its audit of Western’s administration of its borrowing authority. Meeks said, “Working closely together, Western and the Department have implemented many of the IG’s recommendations and are working to implement the remaining recommendations.” He added, “Western and the Department are committed to the responsible and efficient use of our borrowing authority to help build the infrastructure our Nation needs to remain competitive in a global economy. This borrowing authority is key to our efforts to upgrade transmission infrastructure in the western United States.”
Western is requesting a net appropriation of $73.3 million. A considerable portion of Western’s mission requirement is dependent on a combination of offsetting collections and alternative financing (including customer cash advances), which are used to fund a variety of Western activities including annual expenses, purchase power and wheeling and construction.
Much of Western’s 17,000 miles of integrated high-voltage transmission infrastructure was constructed in the 1950s and '60s, with an anticipated useful lifespan of 50 years. More than half of Western’s infrastructure has reached or exceeded its anticipated useful life. Significant reinvestment in the system is required to maintain reliable power delivery. Western estimates the FY 2013 priority construction program need is $83 million. Of this amount, Western will be seeking cash advances of $62 million, or approximately 75 percent of the FY 2013 requirement to fund its Construction and Rehabilitation program.
Meeks pointed out that Western has decreased costs by standardizing business practices, consolidating operations, and following DOE’s lead on cutting programs, like procurement contracts, and other support services. “In program direction, Western cut $1 million in expenses from FY 2012. Western saved $1.6 million consolidating IT hardware and standardizing software in FY 2012, and streamlining and improving existing processes reduced operating costs by more than $15 million. Consolidating operations in two regional offices has resulted in savings of another $745,000.”
Meeks concluded his prepared remarks saying, “Working together with our customers, we are repaying our expenses with interest, ensuring that the beneficiary pays and keeping costs down through sound business and project management practices to be good stewards of the public’s resources.”
Responding to a question on the recent memo Secretary Chu sent to the Power Marketing Administrations, Meeks told members of the Subcommittee, “The Secretary’s memo is a vision of the future for PMAs that’s within our enabling statutes, except for the Revolving Fund. This is the beginning of a conversation.”