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<br />Elk River ~ <br />Municipal Utilities <br /> <br />13069 Orono Parkway <br />Elk River, MN 55330 <br /> <br /> <br />phone: 763.441.2020 <br />Fax 763.4418099 <br /> <br />February 18, 2005 <br /> <br />Deb Walters <br />Elk River Landfill <br />22460 Hwy 169 NW <br />Elk River, MN 55330 <br /> <br />Subject: <br /> <br />4 th Engine/Generator at Elk River Landfill <br /> <br />Dear Deb; <br /> <br />We have been informally discussing adding a 4th engine/generator at the LFG facility, I <br />understand that there is adequate gas to operate a fourth unit from now to the end of the <br />contracts in 2022, Now is a good time to decide if we desire to move ahead with the <br />fourth unit. <br /> <br />The enclosed spreadsheet is the financial analysis which I prepared based on a project <br />cost of$661,000.00 spread over 20 years. The current contract expires in 2022 or <br />approximately 16 years from now. <br /> <br />The additional fourth unit appears to cash flow over a 16-year term. I believe the existing <br />agreements need to be addressed as follows: <br /> <br />a) Grant of Easement between Elk River Municipal Utilities and Elk River <br />Landfill, Inc. with term when electric generating facility ceases commercial <br />operation. Addition of a 4th unit will have no effect on this agreement. <br />b) Gas Purchase contract between Elk River Municipal Utilities and Elk River <br />Landfill with existing term of 16 years and a fixed price. Review fixed gas <br />pncll1g. <br />c) Service Agreement between Elk River Municipal Utilities and Elk River <br />Landfill with existing term of 16 years and varying pricing over 16 years for <br />3 units. Section 2.11 Clean Air Permit will need revising to reflect who is <br />paying for facility air permit revisions and section 6.1. Compensation will <br />need to be adjusted by 4/3 to reflect addition of the 4th unit. Exhibit B <br />should be revised to reflect the 4th unit. <br />d) Promissory Note between Elk River Municipal Utilities and Sherburne <br />County revised to reflect the required additional loan amounts. <br />