Sierra Pacific agreement nets PUD $13 million savings

An agreement between the Grays Harbor PUD and Sierra Pacific Industries will allow the utility to save millions of dollars over the next five years. In addition to increasing the PUD’s financial stability, the agreement with the timber products company will allow Sierra Pacific to continue selling its surplus renewable energy to the PUD for five additional years.

The agreement, approved by Sierra Pacific earlier this month and passed by the PUD Board of Commissioners on Monday, extends the contract through which the energy utility purchases the excess power generated by the renewable biomass cogeneration facility located at Sierra Pacific’s Aberdeen Division. In exchange for the five-year extension, Sierra Pacific has agreed to lower the cost of the surplus energy to a fixed rate, which will save the utility an average of nearly $30 per megawatt hour. Over the next five years, those savings will total an estimated $13.7 million.

“This is a classic win-win situation and a great deal for Grays Harbor County,” said PUD Board President Arie Callaghan. “The cost savings in this agreement will improve the financial stability for the Grays Harbor PUD while at the same time creating a reliable revenue stream for a company that employs Grays Harbor residents.”

“This agreement allows us to continue to provide family-wage, manufacturing employment, locally produced forest products and a cost savings to county residents. It is an example how organizations can work together for the common good,” said Matt Taborski, division manager for Sierra Pacific.

Sierra Pacific’s cogeneration facility converts some of the wood manufacturing byproducts into energy. Under the old agreement, the PUD purchased Sierra Pacific’s surplus power on an increasing scale, rising from $56.33 per megawatt hour in 2011 to a high of $87.43 in 2022, when the contract was to expire. PUD General Manager Dave Ward says the willingness of Sierra Pacific to agree to renegotiate the contract in exchange for a five-year extension will strengthen the utility’s financial position.