In 2022, Pend Oreille PUD signed a long-term agreement to sell the power generated at Box Canyon Dam to Clark Public Utilities beginning January 1,2026 through December 31, 2041.
As this agreement takes effect, here are the key points and what they mean for our community.
Why did the PUD make this agreement?
The amount of electricity that Box Canyon Dam generates depends on how much water flows through the river. The electricity produced at Box Canyon doesn’t match the amount of electricity that is used in Pend Oreille County, so the PUD participates in a market where the difference is bought or sold.
The PUD also receives power from Boundary Dam, which is owned by Seattle City Light. Because of its size, Boundary is one of the lowest-cost power sources in the country. Most of the time, Boundary power supplies the majority of our customers’ needs, which means the PUD often has surplus power that must be sold on the market.
Electricity prices change every hour and can move quickly up or down, while state energy regulations continue to become more complex. In 2022, it often cost more to produce power at Box Canyon than the price we could receive by selling it on the market, which resulted in losses.
To avoid ongoing uncertainty and losses, the PUD entered into a long-term agreement with Clark Public Utilities to provide stability and predictability for our customers. Clark was selected because it is a large, well-established utility with strong financial standing, making it a reliable long-term partner.
How does this benefit our customers?
- More stable bills. The agreement helps protect customers from sudden swings in market prices.
- Stronger PUD finances. Clark pays the forecasted cost of operating Box Canyon, including daily operations, maintenance, and debt. Clark also pays additional value because hydropower is clean, carbon-free energy.
- Stable jobs for Box Canyon employees. The people who operate the dam continue their work with the support of a long-term agreement and a dependable partner.
How does this agreement impact rates today?
When the agreement was signed, it helped prevent our customers from paying higher costs, since Box Canyon power was more expensive to produce than the market price at the time.
Since then, market prices have increased. If the PUD were not committed to this long-term contract, it might be earning more today by selling Box Canyon power at higher prices. That is the tradeoff of long-term stability: gaining predictability while giving up some flexibility. It’s also important to remember that power prices can change quickly and may decline again in the future.
This contract supports the PUD’s long-standing approach of keeping rates steady over time, with smaller, more predictable increases rather than large, sudden rate hikes.
Does this mean we won’t use Box Canyon power locally?
Not exactly. Box Canyon power has been sold through long-term agreements for many years. Most PUD customers currently receive their electricity from Boundary Dam, not Box Canyon.
This is one of the main reasons Pend Oreille PUD customers enjoy some of the lowest electric rates in the country. Our long-term, low-cost Boundary power agreement will continue for decades to come.
What about local jobs and economic development?
A financially stable PUD with predictable rates helps attract new businesses and support local jobs. While larger industrial customers typically rely on market-based power, the PUD can continue offering competitive options for new industries considering our area.
Why is Box Canyon’s clean energy valuable right now?
Washington’s clean-energy laws require utilities to use more carbon-free power. Hydropower already qualifies as clean energy, which makes it more valuable today than in the past.
Think of it like this: if an apple has an “organic” sticker, it usually sells for more at the store. Hydropower’s “zero-carbon sticker” works the same way, it increases the value of the energy we produce. Capturing that value helps keep the PUD financially strong and keeps our rates competitive for customers.
For more information, please visit popud.org or call the PUD at 509-447-3137.