Globe City Council voted to join Hoover Dam power pool.

UPDATE: The Globe City Council voted unanimously at its Jan. 15 meeting to enter into the Municipal Power Exchange (MPX). There was no discussion prior to the vote.

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Later this month, city council will vote on whether or not Globe should enter into a power pool agreement, known as the Municipal Power Exchange or MPX. Officials believe that doing so will help the City save money on electricity it buys to pump water from its wells.  

 The issue is scheduled to be up for a vote at the next regular council meeting on Wednesday, Jan. 15, at the Gila County Board of Supervisors meeting room, 1400 E. Ash St., Globe.

In August 2016, the City of Globe entered into a 50-year contract with the Arizona Power Authority (APA) for buying and selling power and capacity from the Hoover Dam, located on Lake Mead at the Arizona-Nevada border.

Federal law prohibits private interests from receiving federally-allocated power. So, to qualify for Hoover power, an entity must be either a nonprofit, public-use entity or a federally-recognized Native American tribe, said Kelly Urbine with Current Insight, the energy consulting firm that oversees the power allocation and management services of the City’s contract with APA. 

Arizona cities and towns qualify because they meet the nonprofit “public use” definition.

As such, the City can receive federal power, saving money on its own electric bills and passing the benefits along to its citizens, she said.

Urbine points out the City has saved a total of $17,105 in the first two years of the contract—money saved that can go toward other needs.

Conceivably, that $17K could be used for other things such as “street maintenance, parks or any of the other items normally placed in the budget,” she said. “In general, though, it can be seen as a reduction in the overall electricity costs to the city.”

Currently, the City uses its Hoover power allocation to pump water from its wells in the city.

After the contract went into effect October 2017, the City began receiving invoices for electricity it bought at a reduced rate through APA. After also entering into an agreement with APS, the City receives a credit on its electric bills for the Hoover power.

With these two agreements, the City enjoyed a cumulative net savings of $13,500 through June 2019, Urbine said.

APA has now approved the MPX, which allows its participants to engage in activities optimizing their power allocations. City council is now being asked to decide whether or not Globe should “plunge” into the power pool.

The benefit for Globe, Urbine explained, is that it allows the City to work with other cities in the group to optimize the financial benefit of their power allocations.

It also creates an efficient way for Globe to supplement power shortfalls at the Hoover Dam by buying additional power from APA, she said. The supplemental purchases are done as a group to lower the transaction costs.

“In this way, Globe can receive the full benefit of its power allocation regardless of the Hoover Dam output which is affected by drought, low lake levels and, at times, maintenance issues at the dam,” Urbine said. 

Joining the power pool “simply ensures that Globe will receive 100% of the federally allocated power, even if the Hoover Dam does not supply the full allocation,” she said. Additionally, the power pool would be able to order “firming power,” which is additional wholesale power bought to replace any power shortfalls from the Hoover Dam.

In October 2019, the City was able to buy 10 MWh (megawatt hours) of power at $22 per MWh, which cost less than Hoover power. The one small purchase added about $300 in savings over and above the usual savings for that month, Urbine said.

By way of example, Urbine told the council that 10 MWh could power eight average homes for about a month.

The U.S. Bureau of Reclamation, which operates Hoover Dam, forecasts it will generate only about 75 to 80-percent of the allocated amount over the next decade, meaning that “firming power” purchases will be important in creating additional savings for the City, she said.

There are no additional costs for the City to join the power pool. 

In addition to Globe, other nearby cities receiving Hoover power include Payson, Safford and Thatcher. The latter two have contracts dating back to 1987, Urbine said.