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Ashland council approves Mountain Avenue substation purchase

Ashland City Council approved Tuesday the purchase of the Mountain Avenue substation owned by the Bonneville Power Administration.

Electric Director Thomas McBartlett said the project — in progress for about a decade — finally reached an “agreeable point that I think is a good investment for the city and the utility going forward.”

The approval kicked off an eight- to 12-month process before the city writes a check, takes possession and eliminates utility delivery charges associated with the facility, McBartlett said. Last year, utility delivery charges cost the city $177,000 with a 16%-20% increase expected every two years. BPA will execute an environmental study prior to the hand-off.

“It’ll cut costs on what we pay to Bonneville every month, and at the same time give us an opportunity to expand the capacity at that station and prepare for the future load growth as we see fit,” McBartlett said. “With the fuel switching and climate action goals, it’ll put us in a position to be ready for that increased load along with add some resiliency to our system.”

If one of the other two substations owned by Pacific Power experience an outage, the city can pick up the lost load from Mountain Avenue’s central location, he said. The sale price of $895,109 includes all equipment at the station and the land.

The purchase is among the first recommendations in the Electric Utility 10-year planning study presented to the council in August 2014, according to council documents.

In March 2019, the council approved installation of conduits and vaults along Hersey Street in preparation for integrating expanded capacity from the Mountain Avenue substation, and it was completed in July 2019, according to council documents.

As far as the city’s electrification goals, the station could manage about 50 years worth of forecast growth, McBartlett said, and is the only location in the system with the capacity to expand.

When budgeting the project, he said, the Electric Department “rolled it into one piece at the advisement of our financial projections and rate consultant,” with the goal of acquiring debt only once for the station purchase, upgrades and equipment build-out on Hersey Street.

“It was budgeted in the CIP for $3 million for kind of an all-inclusive, for the upgrades and the lines going away from it,” McBartlett said.

The city’s current contract with BPA expires in 2028, and negotiations for contracts after that are in development now for signing in 2025-26, McBartlett said.

Based on increasing utility delivery charges and the “unknown of how Bonneville might treat these kind of facilities post-2028,” he said, delaying the purchase would have put the city at a disadvantage.

“The Hersey Street project, I will note we actually did some better looking at our engineering designs and that came in under a million after we redesigned a little bit,” he said. “We knew we were going to need capacity there at some point. Whether we owned it or we paid BPA to add that capacity, we know it’s coming down the road.”

“The planning and the forethought that has gone into this work to make sure that the city is ready for it, that the city is ready for expanding capacity, such as we’re seeing with developments like Beach Creek and others that are coming in,” Councilor Paula Hyatt said. “We have an exceptional team, they work hard, and I think having control of this asset in conjunction with that will only make us more resilient and ready.”

Councilor Tonya Graham said she found the Electric Department’s efforts to meet climate and energy action plan goals “reassuring” in the context of the infrastructure, contractual and legal obstacles often inhibiting climate work.

“This really has been vetted and vetted and vetted by different councils,” Councilor Stefani Seffinger said. “Seen it before, still agree with it, thank you for your work.”

Also during the meeting, McBartlett secured City Council approval for a class special procurement to allow the Electric Department to “expedite competitive bid solicitations for transformers” and grant the city manager authority to contract for purchases exceeding $100,000.

“There are a number of commercial and residential developments currently being approved by the city’s Planning Department that are going to need transformers that we do not have in our stock and need to be ordered,” according to the special procurement request.

The special procurement period lasts March 2 through June 30, 2024, for three transformers quoted at $113,824 together as of Feb. 16. Justification for the special procurement included a one- to two-year lead time on orders, rising costs, and quotes subject to “escalation costs” at the time of manufacturing.

“With recent supply chain and material issues, transformers have tripled and sometimes quadrupled in price,” McBartlett said.

With quotes lasting only 30 days, flexibility was needed to allow the department to respond promptly, he said.

“Of six manufacturers that we sent it out to get bids, only three even replied,” he said. “We’re not seeing that getting better anytime soon, but we want to be able to provide these for developers like the three that are on here for the school. If we don’t reply in time, somebody else is going to take our spot in the queue.”

As far as emergency preparedness, utilities that weren’t as prepared as Ashland are “feeling the pinch,” McBartlett said, and some utilities in California have been forced to turn developers away.

“Last summer, one of these transformers that’s now $60,000 we received for $23,000,” McBartlett said. “The bigger ticket items like this, it is getting tight and I’m hearing it across the country.”

The motion to approve a special procurement for transformers passed 4-2, with councilors Gina DuQuenne and Shaun Moran voting no.