TID aims to lock in low fuel prices

The Turlock Irrigation District might try to lock in low prices for part of the natural gas for electricity plants.

The district board Tuesday will consider having the staff negotiate a 10-year contract amid a glut of gas around the nation. The fuel would supply 6 percent to 10 percent of TID’s total energy demand, also served by wind, hydroelectric and other sources.

A favorable deal would mean less upward pressure on customer rates. Gas is among TID’s top expenses and its leading method of generating electricity.

Gas prices have been dropping since 2009 because of improved exploration and extraction methods in the United States, said Willie Manuel, resource planning manager, in a memo to the board. Volume has risen by about 30 percent since then, but demand is up only 15 percent.

“The current natural gas price levels have recently encouraged several utilities to begin procuring forward, with multiyear terms of up to 10 years,” Manuel said.

The national average price of gas for power plant use stood at $3.16 per 1,000 cubic feet in January, according to the U.S. Energy Information Administration. That is just a quarter of the peak over the past decade – $12.41 in June 2008.

TID would seek the 10-year gas proposals “from numerous qualified sellers and at multiple delivery points,” spokesman Calvin Curtin said.

The district serves about 101,000 power customers from south Modesto to north Merced County and from the La Grange area to the hills southwest of Patterson.

It got 39 percent of its power from gas in 2014, generated at two plants in Turlock and two in Ceres. Another 19 percent came from wind turbines in Washington state, 14 percent from Don Pedro and smaller hydroelectric projects, and 13 percent in purchased power from an Oregon coal plant.

The other sources include a share in a Lake County geothermal plant and solar panels owned by customers. TID will sharply boost solar next year with purchases from a large plant under construction in Kern County.

This story was originally published April 18, 2016 at 5:37 PM with the headline "TID aims to lock in low fuel prices."