06-29-2009 ERMU MIN SPECIAL - Laserfiche WebLink

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Special City Council and ERMU Commission Page 3 June 29,2009 Commissioner Thompson stated concerns with Connexus truly wanting to negotiate with the city if the Big Stone II project is off the table after July 15.He stated the city has this opportunity to participate in the Big Stone II project and should really take the time to consider it. Mr. Zehringer stated there are many unknowns in staying with Great River Energy. He stated they will be raising rates 25%over the next two years and have had Power Cost Adjustments every month over the last year with the exception of one.He noted the Big Stone II plant will burn coal much more efficiently than any existing coal plants and the city will need to get some of its power from coal.He stated the city needs to seriously consider the Big Stone II option. Mr. Zehringer stated there is a position by the power suppliers that they don't want to sell to municipally owned utilities because supplies are getting tighter.He discussed options with other energy companies. Councilmember Gumphrey noted Elk River Municipal Utilities rates may be the same as Connexus next year. Councilmember Westgaard questioned if the Council would rather be owners than renters in the future when there could be shortages in power supply.He felt there would be more options with owning rather than renting. He stated there wouldn't be much bargaining power with Connexus.He agreed with Commissioner Dietz that the Big Stone II project seems like a good deal but he has concerns with the risks. Mr.Adams addressed inconsistencies in a handout that was sent out over an Internet blog. He stated Big Stone II will be a new plant that will burn coal more efficiently than existing coal plants. He further noted that they are also pursuing green alternatives such as wind power.He stated coal is an important base load and noted that GRE is 85%coal.Mr. Adams stated alternative sources of power are available but can be expensive.He stated only 0.26% of city residents are volunteering to pay more for wind power versus the cheaper alternative of coal. Mayor Klinzing stated the city has been very proactive at working on alternative energy options and listed some of the projects they have worked on as Energy City.She stated she is concerned about the use of coal as a power source and had concerns with pending legislation. She stated she also has concerns with alternative power sources such as nuclear and wind turbines.She stated the Big Stone II project is risky due to all the issues remaining. She stated she isn't outright advocating that the Elk River Municipal Utilities be sold off but felt that all alternatives must be considered. Councilmember Motin questioned whether Connexus would truly be open to any negotiation once the July 15 letter of intent date has passed.He stated the city needs to be careful of its coal usage due to the Energy City designation.He stated he didn't believe the Big Stone II project was geared up to be flexible with alternative energy resources.He noted if Elk River Municipal Utilities were to remain in business,he would want them to continue to acquire additional territory. Councilmember Zetwas stated it's hard for him to support a$100 million project with the risks involved.He stated he is also concerned with Connexus willingness to negotiate with the city. Councilmember Gumphrey noted the city has nine years to figure out other alternatives.