Ten years ago Bountiful and Kaysville city officials took a calculated risk and bought part of a coal-burning power plant near Delta in central Utah.
That risk has paid off for the cities' residents, creating a situation that seems too good to be true. Consider how the plant, named the Intermountain Power Project, has benefited the cities during its five years of operation:- Without cost to taxpayers, the project has secured for residents a 40-year - maybe a 100-year - supply of electricity.
- It has provided a ceiling - impervious to every economic storm (except the price of coal) - that will protect future residents from paying potentially outrageous prices for electricity.
So can what seems too good to be true really be true? In this case, yes, according to project officials.
"This project is one of a kind . . . (there is) not another thing like it in the United States," says Reed Searle, general manager of Intermountain Power Agency, a group of 23 Utah cities that owns the plant.
How does it work? Since 1987 both have sold their shares of electricity generated at the plant to power-starved California, which pays more than 5 cents for each kilowatt-hour. The West Coast money pays the cities' share of construction and operating costs, allowing access to a lot of electricity for free.
"It's like food storage for free, except it's power storage. We can use that electricity anytime we need, but we're not paying for the storage or generation now," said Cliff Michaelis, Bountiful Power and Light manager.
The plant generates 1,680 megawatts every day. Bountiful's share is 27, about half of what city power users consume every day. Kaysville owns just over 11 megawatts.
Neither city currently buys power from the plant, opting instead to purchase cheaper electricity from other sources. But the plant is like an insurance policy against the possibility of skyrocketing power prices in the future. Best of all, taxpayers aren't paying premiums to keep the "policy" in force and won't until "coverage" is needed, Michaelis said.
For example, Bountiful currently pays other sources about 2 cents for each kilowatt hour, Kaysville about 3.5 cents. But that may not always be the case.
"In the future, some Utah cities could be paying as much as 100 mills (about 11 cents per kilowatt hour) for their power. But Bountiful and the other 22 cities and towns that own IPP will be able to buy power much cheaper from the project," Searle said.
One kilowatt hour generated at IPP now costs about 52 mills or 5 cents. Two-thirds of that cost will remain the same no matter what economic storms blow through the power-generation industry, Michaelis said. Therefore, cost of IPP electricity won't be influenced as much by economic factors that influence other electricity companies.