Morse Creek facility issue presents costs for Port Angeles no matter which option is chosen
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Water flows over the Morse Creek Dam at the water intake located 21/2 miles upstream from the power generation station southeast of Port Angeles. Keith Thorpe/Peninsula Daily News

By Jeremy Schwartz
Peninsula Daily News

PORT ANGELES — What ever Port Angeles officials decide to do with the city’s shuttered Morse Creek hydroelectric facility, it will likely cost the city money.

How much? Up to $3 million, potentially, if every trace of the facility has to be removed, but that is far from certain, according to an engineer consulting on the project for the city who spoke to Utility Advisory Committee members at their meeting last week.

“None of them particularly have positive impacts on the city. They all cost the city,” said Donald Jarrett, an engineer with McMillen LLC in Seattle, referring to three options presented for addressing the Morse Creek facility.

The small city-owned hydroelectric dam, which straddles Morse Creek about 5 miles south of where the creek passes under U.S. Highway 101, had historically produced about 0.3 percent of the city’s total power usage until it was shut down in April 2012 following the failure of a key piece of machinery.

Built in 1987 amid fears of skyrocketing electricity costs, the facility was turned off several times between 1997 and 2004 as it became more costly to operate, said Phil Lusk, the city’s deputy director of power and telecommunication systems.

City staff have now referred to it as a “liability” and have been seeking advisory committee input on what to do with it next.

Lusk told advisory committee members the city has until Aug. 11 to tell the Federal Energy Regulatory Commission, which licensed the project to the city when it was built, what the city intends to do with it.

Not doing so would put the city in violation of the license terms, Lusk said, which could lead to the regulatory commission forcing an option upon the city.

In this case, the city would have to comply or face fines, Lusk added.

“Simply, we must take action or action will be taken for us,” Lusk said.

At Tuesday’s committee meeting, Jarrett presented analyses of the three options for the facility: repairing it and returning it to service, selling the project and transferring the city’s license to another party, or surrendering the license back to the regulatory commission and decommissioning the facility.

Jarrett placed the cost of the last option at a minimum of $348,000, depending how much, if any, of the facility’s structure would have to be removed as part of the decommissioning process.

Completely removing the facility could cost $3 million, Jarrett said, though he described these cost estimates as “highly speculative.”

The facility was built across an existing concrete water diversion weir and also includes a 11,400-foot pipeline.

The surrendering process would take between one and two years, Jarrett explained, and would likely involve consultations with multiple state agencies.

Jarrett estimated bringing the facility back to operation would cost at least $599,000, while selling it and transferring the license would be at least $831,000.

The high cost for selling it stems from the city likely having to offer incentives to a potential buyer to compensate for risks associated with the facility, Jarrett explained.

This, Jarrett said, plus the fact that using it to produce electricity would cost more than current market rates from the Bonneville Power Administration, make the selling option the most expensive.

The city buys its electricity for about $30 per megawatt hour from the Bonneville Power Administration, Lusk said, while using the Morse Creek facility would cost about $45 per megawatt hour of electricity.

“I don’t like any of the three options. They all cost us money,” said Lee Whetham, City Councilman and vice chair of the Utility Advisory Committee.

Craig Fulton, city public works and utilities director, said the Clallam County Public Utility District relies on the dam built as part of the facility for a certain amount of their water supply.

Whetham said he wanted more information on the value of the facility and the property and for city staff to talk to the PUD about their possible interest in it.

Fulton said staff can come back to the July 8 committee meeting with a value figure, adding that he was planning to meet with PUD staff about the facility this week.

Advisory committee member Sissi Bruch, also a city councilwoman, said she wanted a little more time to explore partnerships with other organizations, such as Peninsula College, so the facility could be used in some way to mutual benefit.

Bruch floated the idea of teaming with the college to use facility as an engineering learning lab of some sort.

Utility advisory committee members ultimately did not make a recommendation on how to proceed, requesting instead city staff come to the committee’s July 8 meeting with additional options.

“We’re hopeful we can identify a slight positive revenue outcome, if nothing else a break-even revenue outcome, so we can fulfill our obligations to the federal government and at the same time not present a rate impact to our customers,” Lusk said in an interview after the meeting.

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Reporter Jeremy Schwartz can be reached at 360-452-2345, ext. 5074, or at jschwartz@peninsuladailynews.com.

Last modified: June 15. 2014 6:37PM
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