Staff recommends returning GRDA agreement for up to 15 MW to stabilize Ottawa’s power costs

Ottawa City officials reviewed the city’s electric power portfolio on Feb. 26 and recommended returning a renewal of the Grand River Dam Authority (GRDA) agreement with a base allocation up to 15 megawatts for formal consideration at the March 5, 2025 City Commission meeting.

The presentation, led by Hans Secker, the city’s electric production superintendent, laid out Ottawa’s mix of hydro, wind, gas and market purchases, and explained how regional market dynamics and recent winter storms have driven volatility in wholesale prices. “GRDA is willing to extend the existing agreement with the same terms, the 12 megawatts that we have,” Secker said, noting staff’s recommendation to review and acknowledge the city’s current procurement structure and consider a base allocation up to 15 megawatts.

The discussion matters because the city’s mix of owned generation and long‑term allocations affects rate stability during high‑price events. Commissioners and staff repeatedly cited Winter Storm Uri as an example: Neil Daney of Kansas Municipal Energy Agency (KMEA) said market hedging and the GRDA allocation reduced Ottawa’s exposure during that event. Daney explained the agency’s newer hedging approach: “As you get closer to the month of production … they might hedge as much as 90% of the gas and lock it in for that production time period,” a change he tied to preventing the extreme price spikes seen in prior storms.

Key facts from the presentation: - Ottawa’s accredited capacity was reported at 41.87 megawatts; the city’s stated capacity requirement was approximately 40.5 megawatts. Staff noted system capacity rules require utilities to hold peak plus a planning margin. - Current allocations include roughly 12 MW from GRDA (12 MW in summer months, minimum 9 MW in cooler months; agreement expires in 2026), about 8 MW from Buckeye Wind (agreement expiring in 2033), 2.5 MW from Marshall Wind (expiring 2036), roughly 5.2 MW ownership of capacity at the Dogwood natural‑gas facility (life of the unit), and small allocations from WAPA and Southwestern Power Administration. Several agreement expiration dates were shown on slides. - During extreme winter conditions, wind and solar output can fall and natural gas prices spike; staff said Ottawa ran its own diesel/natural‑gas dual‑fuel units and carried emergency fuel to sustain operations. Secker said the city now seeks to carry about 90,000 gallons of fuel to run four generators for roughly 72 hours if needed.

Secker told commissioners the GRDA allocation is “the lowest cost option for baseload needs” in many years and that GRDA has moved toward removing coal from its fleet and adopting a hedging program in partnership with a commercial counterparty. Staff emphasized the GRDA allocation is a rate‑stabilization resource rather than a guaranteed least‑cost source each year.

Commissioners asked about supply if the city’s capacity falls short and whether additional capacity could be purchased on short notice from KMEA or other EMP‑1 participants. Staff said shortfalls could be met by purchasing capacity from EMP‑1 partners or elsewhere in KMEA, or by buying “paper capacity” (contracted capacity) in the market if needed.

At the end of the item, staff asked whether the commission would like a formal motion or whether consensus was adequate. Mayor Pro Tem Klein and commissioners indicated consensus was acceptable: staff will return a proposed agreement for up to 15 megawatts for formal consideration on the March 5, 2025 agenda. Secker also invited commissioners to tour the electric production facility and the southeast substation.

The presentation included technical and financial slides showing how the Southwest Power Pool (SPP) day‑ahead market stacks generation by cost and how reduced wind/hydro and constrained natural gas supplies can push market clearing prices sharply higher.