PABLO — Last week Energy Keepers, Inc. Chief Executive Officer Brian Lipscomb presented the Flathead Nation Tribal Council with EKI’s FY 2021 dividend payment of $4.295 million derived from the operation of Séliš Ksanka QÍispé Dam. The Confederated Salish and Kootenai Tribes are the shareholders of EKI.
The CSKT began managing the hydroelectric facility under a Federal Energy Regulatory Commission license in late 2016 shortly after the purchasing then-Kerr Dam from NorthWestern Energy. The CSKT are the only Tribal Nation in the United States to own and manage a hydroelectric facility.
Lipscomb said the $4.295 Enterprise Dividend Fund payment is part of four EKI payment streams to the CSKT. The other payment line items, are: a Land Rental payment of $18 million that goes into the General Fund; a Loan Payment of $2.5 million that goes into a Dedicated Trust Fund; and a FWIS payment of $2.3 million into the FWIS Mitigation Fund. From FY 2016 through FY 2021 EKI has paid the CSKT $142.2 million via those line items.
From FY 2016-FY 2021, EKI has generated a 172 percent growth in net revenue— $21,496,612 in FY 2016 to $58.5 million in FY 2021. The two drivers of the EKI net revenue growth have been “Forward Power Sale Contracts” and “Power Trading”. Forward Power Sale Contracts are long-term energy contracts to wholesale electricity customers while Power Trading is, as its name implies, the buying and selling of physical and financial electricity.
Lipscomb said the big cog in the Forward Power Growth is a 2020 15-year power supply contract with Puget Sound Energy which provides power to Seattle and the Puget Sound area.
Energy Market Trading is not a financial wallflower for EKI. Lipscomb said the physical and financial trading of power is an essential component of EKI’s financial growth and stability. EKI maintains an active Risk Oversight Committee that monitors the dynamic market producing reports daily.
“Marketing plays a role in some of these deals, as well as the optimization of our assets that include generation, transmission and environmental attributes,” Lipscomb said. In all the net revenue stream grew by $21.5 million in FY 2021, a 57 percent growth over the year.
In order to make money, you have to spend money. In EKI’s case that, among other things, means investments in the operation and maintenance of the physical plant, i.e., the Séliš Ksanka QÍispé Project. From FY 2015 to FY 2021 EKI has invested $18 million in rehabilitation and betterment projects. The lion’s share, $14,463,424, has been in unit reliability. The remaining line items are operations support, $216,861; infrastructure, $2,668,207; and, water control, $784, 692.
Those investments lessen the chances of components failure that negatively affects the hydroelectric production — down time is expensive. The Equivalent Forced Outage Rate, as down time is called in the hydro industry, has been reduced and held below industry standards for the last three years.
That is the result of EKI’s operational risk reduction strategy, which is kind of like ensuring that you have air in a spare tire. For instance, the standard cost for an unplanned outage for a generator winding failure is approximately $7 million, a rushed unplanned outage is approximately $6.7 million, and the cost of a planned outage is $3.1 million. Similar unplanned outage costs vs planned outage costs were applicable to step up transformers.
“In addition to these reliability investments” Lipscomb said, “EKI is addressing all flood gate issues in concert with the Federal Energy Regulatory Commission.”
“We work with FERC in taking care of all dam safety issues,” Lipscomb said. “FERC has the role of managing dam safety. Properly maintaining the infrastructure is important and the solution is to keep ahead of the water supply which is changing due to climate change. We now have earlier spring runoff that the dam catches sooner now and we manage it differently.”
Climate change is already negatively affecting the ability of some hydroelectric facilities in the southwest to meet demand, and that will continue.
“Supply and demand analytics drive power trading and we want to be ahead of the curve on that,” Lipscomb said.
The present water availability in this part of the Northwest and a well-maintained physical plant — SQK Dam — and managed by EKI puts it ahead of the curve but there is beanball out there in climate change.