5.6 EMRUSR 08-13-2024 - Laserfiche WebLink

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Ji Elk River amft . Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: ERMU Commission Mark Hanson —General Manager MEETING DATE: AGENDA ITEM NUMBER: August 13, 2024 5.6 SUBJECT: Future of ERMU Power Plant ACTION REQUESTED: Discussion Only BACKGROUND: Elk River Municipal Utilities (ERMU) has maintained the existing power plant since its construction in 1947. The original two engines, with a combined generating capacity of 1.1 megawatts (MW) of electricity supplied power to the village of Elk River until 1961 when a third engine, with a generating capacity of 3.0 MW, joined them. The final engine, with a generating capacity of 5.0 MW, was installed in 1972. However, by the mid-1970s, large-scale power generation plants and transmission lines created the availability of inexpensive, reliable power. By 1978, Elk River met all their power needs through a cooperative purchasing agency. Since then, the plant has been maintained for auxiliary purposes only. For the last 40+ years, the engines have run for 60-120 minutes once a month to test their operational status. Unfortunately, the intermittent, short duration run times associated with these backup generation test runs are the worst possible scenario for engines of this era. These engines were built to reach operating temperature and run for long periods of time. The large temperature swings associated with intermittent runs are extremely tough on the lubrication and cooling systems. Not surprisingly, costs to maintain the engines have continued to rise. Additionally, since we do not have full-time staff dedicated to the operation and maintenance of these engines they will only continue to decline. In late 2022, staff explored an opportunity via a Midcontinent Independent System Operator (MISO) emergency demand response (EDR) program to create a revenue stream to offset the increasing maintenance costs of the engines. The requirements of the EDR program proved too complex so the enrollment effort was postponed until pending changes were better understood. Since then, MISO has increased both their reliability criteria, their fees for noncompliance, and lowered their potential revenue payouts. As such, the EDR program is considerably less attractive, especially given the current condition (reliability) of our engines. Lastly, the generators have limited value as a backup power source due to the significant redundancy within our own distribution network and within GRE's transmission network achieved over the last 40 years. All our substations have multiple interconnected transmission Page 1 of 2 97