The Intermountain Power Agency is holding the line on its 1998-99 budget as part of a five-year plan to spend less.
The IPA's board of directors Monday approved a budget of about $690 million for the year starting July 1.Dan Eldredge, IPA accounting manager, said the budget is designed to anticipate the costs of operating the Intermountain Power Project - a coal-fired electricity generation plant in Delta.
Almost all of the power the IPP generates is used by the California cities of Los Angeles, Anaheim, Riverside, Pasadena, Burbank and Glendale. Because California is in the early stages of its newly deregulated electrical market, the Utah plant has been trying to cut costs now so its prices will be more competitive in the future.
As part of a five-year plan to reduce costs, Eldredge said, the 23 Utah municipalities that are part of the IPA agreed to keep the plant's budget stable. That's why the 1998-99 budget is about the same as the one for 1997-98.
"We're in the third year of that (five-year plan)," Eldredge said Tuesday. "The idea was that (the budget) wouldn't change from year to year, and any savings that could be achieved through efficiencies in operation or refinancing would be retained through the agency."
IPA officials have said the Delta plant currently charges higher than market prices for power, largely due to the plant's approximately $4 billion in debt. The IPA's plan calls for reduction of that debt by 40 percent by 2002.
"There is a provision within the budget that if the actual costs are less than the budgeted amount, then (the difference) will be kept by the agency to be deposited in the bond retirement financing account, which is used to reduce debt," Eldredge said.
"The idea is that debt will be retired in advance of its scheduled maturity to the extent possible."
The IPA was formed to finance, construct, operate and maintain the IPP. The Los Angeles Department of Water and Power is the project's operating agent.