4. ECCSR 10-17-2007 - Laserfiche WebLink

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5.0 Summary and Conclusion Redevelopment of the Lake Orono Dam is dependent upon the requirements of state, federal, and local agencies, the cost of studies and construction, and the revenue the project can develop as well as the desire of the Elk River Municipal Utilities to redevelop the project. While the current sentiment is for renewable energy, regulations of water-based structures including dams and hydroelectric activities can be a detriment in the process. Two hydroelectric projects are currently in process for development in the city of Minneapolis. One is the Crown Mill site, located on the right bank adjacent to the St. Anthony Falls, Upper Lock and the other is the Lower St. Anthony Falls site, located on the left bank and to the left of the Lower St. Anthony Falls Lock and Dam. Both sites are located on the Mississippi River. Water rights differ between the two sites that will impact the volume of water that is available for generation. The upper Crown site has about 50 feet of head while the lower St. Anthony Falls site has about 25 feet of head. Neither site has an existing powerhouse or any other generation equipment. Development within the city of Minneapolis can be challenging, the Crown site has been in the development process for over a decade and the lower dam site has been idle since 1985 when the dam failed. These sites have favorable head (50 feet and 25 feet) and flow but still remain undeveloped- indicating the difficultly with the overall process. Development of Lake Orono for hydroelectric generation will be costly and may not have favorable economic factors. A preliminary net present worth of the annual revenue from generation ranges from $500,000 to $1,000,000 using an annual interest rate of 5% for a period of 20 years, and $600,000 to $1,370,000 for a period of 40 years. The range of estimated costs to permit and construct the project is $1,477,000 to $4,166,000. This initial cost estimate and assessment of revenue shows that the project will not provide a 20-year return on investment. These revenues and costs are highly variable and may change over time. The revenue/cost comparisons are meant to provide an order-of-magnitude comparison. If hydroelectric development at the Lake Orono Dam remains of interest to Elk River Municipal Utilities, the following are recommended: • Send a letter to the local, state, and federal stakeholders seeking their input regarding development of hydropower at the Lake Orono Dam. • Complete a Phase 1 inspection to determine the condition of the facilities and suitability for development. • Refine the selection of the turbine generator capacity/output. • Evaluate optional turbine generator supplies to better determine cost and required site modifications. • Revise the economic assessment to consider the revenue per Kw-hr and an annual interest rate for the capital expenditures. • Reassess the estimated cost and revenue. P:\Mp1s123 MN\71\2371089 Elk River Municipal-Orono Dam\WorkFiles\Report\Lake Orono Dam Assessment Report.doc 7