Tacoma Public Utilities has attracted a potential renewable hydrogen producer for the electrofuel service pilot the utility's board approved at its Oct. 28 meeting that aims to support production of fuels with low-carbon content.
Approval of the pilot is pending before the Tacoma City Council, which will conduct hearings on the proposal in November and December. If approved, the rates would take effect April 15, 2021, and the pilot program would end in 2030.
Under the pilot, the utility would offer producers of electrofuel—synthetic fuels such as hydrogen that are typically made from electricity, water and air—a below-market tariff in exchange for curtailing consumption during price spikes or system strains up to 15 percent of the customer's annual consumption. Participation would be capped at 65 MW.
TPU board members lauded the pilot for advancing the municipality's climate goals and encouraging economic development.
Bonneville Environmental Foundation and an undisclosed private-sector partner plan to develop a 60 MW facility within Tacoma Power service territory to produce and store renewable hydrogen.
The utility already has done a system impact study for the project, Evan Ramsey, senior director of BEF's renewable energy programs, told Clearing Up. Tacoma has not guaranteed BEF's project will be in the pilot, but "we did help inform the structuring of the rate." He added that the group and its partner are close to securing land for the project, which should clear the way for publicly announcing the project before year's end.
A renewable hydrogen fueling station for the BEF effort is planned to be near Centralia, Wash., along Interstate 5. Money for it largely comes from a $1.9 million grant from the Centralia Coal Transition Board (CU No. 1975 ). Douglas County PUD will provide the renewable hydrogen.
Tacoma City Council must approve the pilot program, as well as rate changes and another new tariff recently approved by the TPU board for shore power.
The shore power rate aims to encourage electrification at the Port of Tacoma by making it easier for ships to plug in rather than use bunker fuel while in port.
The new tariff drops the existing demand charge in favor of a higher energy charge that makes billing easier, Erin Erben, Tacoma Power's assistant power section manager, told board members at their Oct. 28 meeting.
"I love all of this," board member Christine Cooley said. "It hits all the three Es and all the three Ps of sustainability—people, planet, prosperity and equity, economy and environment."
Replacing bunker fuel with electricity will also improve air quality, TPU board Chair Bryan Flint said.
The TPU board also opted at its Nov. 6 meeting to support gradual rate increases in the near future, citing ratepayer impacts if they held them steady throughout 2021 and followed that with steep rate increases to catch up with rising costs amid a pandemic economy.
"If we don't do it now, we're going to have to really pound the ratepayers later," TPU board member Mark Patterson said.
The muni's rates will go up by 1.5 percent starting April 1, 2021, followed by a 2-percent increase in 2022.
The increases apply across all rate classes and to fixed and variable costs. The increases are projected to bring in an additional $19 million in revenue over the two-year period. Tacoma Power initially asked for two 2-percent increases, one in 2021 and another in 2022. However, the utility opted to lower the first increase to 1.5 percent and use financial reserves and cost-cutting to cover the difference, projected to be about $4 million, according to staff presentations to the TPU board.
The utility already is juggling a $26.4 million shortfall in its 2019-2020 budget, and the COVID-19 pandemic has not helped. Since it hit in March, monthly retail loads through August have been lower than projected by between 1.8 percent and 5.8 percent.
Even using reserves, the utility still expects to have about 188 days' worth of cash in reserves, which was welcome news for Cooley.
"I don't think that the financial hardships are going to let up in the next couple years, so I just don't want to take the reserves for granted," she said.
The option not taken would have kept rates flat in 2021, followed by 4.5-percent annual increases through 2024 to catch up financially.
Editor's note: This story incorrectly stated that BEF is working with LADWP to convert one of the muni's coal-burning plants to a renewable hydrogen-fuel plant. The foundation is not involved with the project in any capacity.