The solution remains a work in progress, but a presentation at Tuesday morning’s work session by energy management consulting firm Pace Global could help determine a path to take.
“The one thing I took out of this is that we need to do something,” said Councilor Dan Darnell.
The presentation and information session narrowed down some possible solutions, Darnell said.
The Pace study examined a variety of economic and industry factors, and presented 10 potential options for City Council consideration.
The motivating questions behind the study were how a potential local shale production boom, a weak economic outlook, or potential closures at San Juan and Four Corners generating stations could affect demand for electricity generation in the area, said Pat Augustine, director of power market advisory at Pace Global.
The study considered factors such as whether the city should pursue a large natural gas development in anticipation of an economic boom with the option of selling excess power to the California market, whether the city should purchase electricity to meet its peak demand rather than investing in additional power generation infrastructure, whether Farmington should purchase additional ownership in San Juan Generating Station and whether the city should consider adding solar generation.
Councilor Jason Sandel asked what market demand in the region for electric generation looks like.
“It depends on the region,” Augustine said.
Some indicators show a 1.5 percent increase in demand per year for some areas of the state; however, other areas remain flat and others are experiencing decreases, Augustine said.
Councilor Mary Fischer asked why no wind or nuclear power generation options were included.
Pace included both options during early phases of the study, but found that both were cost prohibitive, Augustine said.
The firm’s recommended plan suggests building a local natural gas-fired, combined-cycle plant with an option to develop solar power infrastructure after 2025, when prices of the technology are expected to have dropped significantly.
The Preferred Resource Plan would add a new 105 megawatt or 65 megawatt gas-fired, combined-cycle plant in 2017 or 2018 as well as between 20 and 60 megawatts of solar power generation around 2025.
The key to planning for Farmington’s electric generation needs lies in the region’s future economic conditions.
However, San Juan County has regularly experienced boom-bust cycles associated with oil and gas industry development.
Rather than attempting to predict future economic conditions in the San Juan Basin, the study provides contingency plans for a variety of economic scenarios, Augustine said.