The Western Area Power Administration will be paying Utah Power & Light Co. an additional $500,000 annually to deliver federal hydroelectricity to WAPA customers under terms of a new contract.
WAPA had been paying UP&L $1.9 million annually, the new contract is for $2.4 million.WAPA is the marketing agency for generated at dams within the Colorado River Storage Project area. That electricity is principally sold to municipal power companies and rural power cooperatives. The contract allows the electricity to be delivered using UP&L transmission lines.
Dave Eskelson, UP&L spokesman, said a three tiered rate structure is included. WAPA will pay UP&L $4.20 per kilowatt year for the first 230 megawatts delivered and $4.20 per kilowatt year plus a surcharge for increased operation and maintenance costs for the next 100 megawatts. Additional deliveries will be charged at the federal rate in force at the time of the delivery. That rate may vary as determined by the Federal Energy Regulatory Commission.
WAPA officials said the new contract gives the agency more flexibility because it increases the number of places where interconnects with UP&L lines can be established.
The contract increase was anticipated and has been factored in to WAPA's request for a rate increase that is expected to range between 35 and 42 percent. The agency has begun the hearing process on the rate increase which should be finalized later this year by FERC.