Chelan PUD Approves Power Supply Contract With Microsoft

Chelan PUD approved a contract to supply power to Microsoft's data center campus in Malaga.

Commissioners approved the contract at their meeting Monday.

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“Chelan PUD has a long history of managing local hydropower in the best interest of customer-owners,” said General Manager Kirk Hudson. “We’re continuing that legacy by preserving what’s most important to our customer-owners - reliability and low rates.”

Large Loads Ahead

The PUD's large-load framework offers three options for the supply of energy: Short-term supply, customer choice, and negotiated contract.

Short-term supply allows Chelan PUD to procure wholesale energy from the market and resells to the large-load customer. Customer choice utilizes a large-load customer identifying wholesale energy, which the PUD purchases and re-sells to them. The negotiated contract may include surplus hydropower.

“We’re proud of the contract that’s before the commission now. It makes good on our commitment to pay our own way for the energy that’s required to power our data centers,” said Irene Plenefisch, Senior Director of Government Affairs at Microsoft. "Under the large load contract, we will receive energy from a third-party supplier. That means we will be bringing in new, clean power from outside the region.”

Provisions Ensuring Stability

Microsoft paid $86.5 million up front to build the Jumpoff Ridge substation and other improvements needed to serve the data center, which is considered a large load.

The PUD says several provisions in the agreement ensure stable rates. Those terms include a load maximum of 288 megawats for 15 years with an option to extend for additional five-year periods until one party opts out. Chelan PUD will also retain full control over its hydroelectric projects are used.

The PUD factors shutdown prtections, termination damages, financial protections, changes to energy markets and laws, power supply cost and sourcing, and more into the contract.