Standing, Kris Sellstrom, Jamestown Board of Public Utilities electrical engineer, gives a risk management presentation on the electricity market during a regular meeting of the BPU board Monday. P-J photo by Dennis Phillips

Jamestown Board of Public Utilities officials are dealing with several factors while trying to keep electric cost as low as possible for its customers.

On Monday, Kris Sellstrom, Jamestown Board of Public Utilities electrical engineer, gave a risk management presentation on the electricity market during the regular meeting of the BPU board. A risk management plan is required by the New York Independent System Operator Inc., with the BPU’s plan adopted in 2012.

The risk management plan is intended to create a framework wherein financial risk is mitigated through a structured process. The structured process includes assessment, documentation and oversight. The day-to-day business activities associated with the plan include the procurement and sale of electrical energy within the New York Independent System Operator Inc. marketplace, the procurement of fuel needed to operate the Samuel A. Carlson generation station and the sale of electrical generating capacity from the electric plant. The status of the plan is consistently reviewed and improvements are recommended, with implementation on an ongoing basis.

Sellstrom said quarterly electric market updates are provided to the board’s Finance Committee. He said the goal of the plan is to manage risk caused by the volatility of the wholesale energy market and electric generation challenges.

There are several electric division financial risk factors Sellstrom discussed in detail with the board. One of the risk factors is local load, which is impacted by seasonal weather and trends overtime. One trend impacting the BPU negatively is the number of customers are declining. He said residential customers are declining, but for possible reasons like technology, the usage is staying the same. However, for commercial and industrial sectors both customers and usage are decreasing.

Sellstrom discussed the New York Independent System Operator Inc. wholesale markets. New York Independent System Operator Inc. is an independent organization responsible for managing New York’s electric grid and its competitive wholesale electric marketplace. Major markets/areas of operation include energy, day ahead and real time; capacity; transmission; regulation/dispatch; and ancillary services.

Sellstrom said the day ahead and real time market prices basically are the same a majority of the time. However, when the prices aren’t the same, their drastically different. Issues that cause real time prices to vary from the day ahead include transmission constraints, higher or lower load than forecast, generator outages, weather experienced by renewables (wind/solar) and storm risk.

Sellstrom said some of the mandates associated with the Clean Energy Standard also impact the cost of electric for BPU customers. He said currently two administered programs — Renewable Energy Credits and Zero Emission Credits — are huge costs to BPU customers.

Zero Emission Credits are intended to subsidize nuclear power plants running, at least, until 2030. In April 2017, the BPU began paying about $125,000 per month or $1,500,000 per year for Zero Emission Credits.

The impact is roughly a 10 percent increase in the fuel adjustment cost or about a 3 percent increase to the BPU’s overall rate.

Sellstrom said Renewable Energy Credits are a way for state officials to collect money that is used to subsidize new renewable generation such as wind and solar power generation. In April 2017, the BPU began paying $2,000 a year, which has ramped up to $81,000 in 2019. He said the impact of Renewable Energy Credits is currently minor, but the board and customers should expect it to ramp up exponentially in future years.