4.1. ERMUSR 10-11-2011 - Laserfiche WebLink

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Joining CMMPA would be very different from the all requirements contract option with Connexus/GRE. Central Minnesota Municipal Power Agency is a project oriented joint action agency of 12 members. They provide power project options that the members can choose to participate in. The members do not necessarily have the same portfolios. The board does not make decisions on projects without the approval of the member's governing bodies. The advantages to this type of arraignment are total flexibility and local control. There are significant disadvantages too. There is more risk with the project oriented joint action agency business model. Another thing to consider with CMMPA is their size. The total load of the 12 CMMPA members is about the same size as ERMU alone. Other options that need to be explored including but not limited to: • Minnesota Municipal Power Agency (MMPA) -Owned by its 11 member municipal utilities, provides an all requirements type service. The governance/management relationship within MMPA is structured such that the agency is able operate like a business unencumbered by governing body involvement. In other words, the governing body sets policy and the agency management runs the day to day operation of the business. This agency is comprised of similar sized municipal utilities mostly located in the metro area. There would be transmission interconnection details to sort discuss. Missouri River Energy Services (MBEs) -Representing 61 member municipal utilities within North Dakota, South Dakota, Iowa, and Minnesota. Most, if not all of their members are eligible for hydro power as part of the Western Area Power Administration (WAPA). Missouri River Energy Services was really established to provide power to supplement the WAPA hydro allocations. • Southern Minnesota Municipal Power Agency (SMMPA) -Owned by 18 member municipal utilities and a 41% owner of the Sherco 3 power plant. There may be opportunities to explore with SMMPA because 3 of their member making up more than half of their total load have opted out of renewing their contract. There would be details needing to be worked through regarding timing of contracts. SMMPA has never added a new member before, but under the current circumstances of losing 3 members this may be an option. Xcel Energy and/or Minnesota Power -There are many municipal utilities that have power contracts with Investor Owned Utilities (IOUs). Their business is not aligned with the goal and values of public power, but that doesn't mean would be out of the question. Ultimately, the wholesale power rates will be an important factor in ERMU decision. There are other things to consider. Advocacy, size, transmission, adaptability, asset diversity, goals and values are all important. The decision to join with like Cities or enter into a contract with IOUs or Coops will hinge largely on the importance of having similar goals and values. The choice between entering into an all requirement contract or participating in individual project and being independent will hinge on ERMU's position on comfort level at a premium verses higher exposure to risk for lower costs. In the end, balance and diversity help to eliminate the extremes. Early this year ERMU requested a quote from SAIC (R. W. Beck) to analyze the results from the Resource Planning Coalition Request for Proposal with CMMPA compared to renewing with Connexus/GRE. The quote was very high and the Commission directed staff to seek another quote. Since that time, SAIC has revised their quote. Staff has also requested a quote from Power Systems Engineering (PSE). These quotes are attached for Commission review and consideration.