The City of Truth or Consequences started buying electricity from a solar farm in February 2015. It is owned by SSA#4, located on City land near the Sierra County Fair Barn.
The City signed a 25-year contract with the company, a “power purchase agreement,” which is based on the legal fiction that Sierra Electric Cooperative’s rates will go up 3 percent a year. Since SSA#4’s rates start out lower and only go up 1.5 percent a year, the City will save money by buying electricity from them, the contract states.
On page 57 of the 58-page contract, the City and SSA#4 agree that no matter what Sierra Electric’s real rates are, they will adhere to the legal fiction as the stated “savings.”
The fifth year figures will not be available until February 2020 or later, since that is when the contract year ends, but SSA#4’s first four year’s figures show fictitious savings of nearly $82,000.
In reality the City saved a little over $34,000 from February 2015 to February 2019, since Sierra Electric’s rates only increased once over that period, from .08421 cents to .08496 cents a kilowatt hour in December 2018, less than a 1-percent increase.
However, SSA#4’s rates nearly caught up with Sierra Electric’s rates this contract year. From February 2019 to February 2020, Sierra Electric’s wholesale rate to the city is .08496 cents a kilowatt hour and SSA#4’s rate is .0847 cents.
After February 2020, SSA#4’s rates will exceed Sierra Electric’s.
The City’s contract with Sierra Electric is not up for negotiation until 2022, therefore the .08496 rate should remain steady until then. But SSA#4’s rate will go up to .0860 cents in February 2020.
Since the City Commission agreed to the legal fiction, the contract signed February 2015 by Mayor Sandra Whitehead, there does not appear to be any remedy for not only the lack of savings, but the extra cost for buying electricity from SSA#4.