2. SR 06-29-2009 - Laserfiche WebLink

Home Browse Search

local distribution.) If the City were to sell the municipal electric utility, Connexus also has interest in acquiring the municipal electric utility. Connexus staff will be looking into these all of these scenarios; however execution of any of these scenarios would require GRE board approval. Because GRE board approval is needed for Connexus to enter into any contract with or sale of ERMU, solid numbers for these scenarios are not available at this time. For the purpose of discussion, outlined in this memo are four scenarios: Renegotiating an all requirements power purchase contract with Connexus Energy, Participating in BSII and supplementing with other peaking plant ownership, Participation in B SII and supplementing with a partial requirements power purchase and ancillary services contract (for example with Connexus), and the sale of the electric utility. (It should be noted that participation in BSII and the sale of the electric utility are not mutually exclusive. Participation in BSII does not exclude the City from selling the electric utility at a later date. The ownership in BSII may be an asset in the sale of the electric utility.) Also outlined in this memo are benefits and disadvantages of municipal ownership of an electric utility. Renegotiate All Requirements Purchase Power Contract with Connexus Energy 1. Connexus cannot enter into this contract without GRE board approval. The GRE board is made up of representatives of the coop members of GRE. 2. A rolling 10-year contract similar in structure to the current contract may be an option. The margin markup for Connexus would be negotiable. 3. Early contract renegotiation discussions involved only fixed term 5-year contracts beginning in 2014. The first 5-year contracts would have a 5% adder for Connexus. This would be on top of any GRE wholesale rate increase. The consecutive second 5-year contract would have an additional 5% adder for Connexus (for an overall increase of 10% over 10 years). Again this would be on top of any GRE wholesale rate increases. Power Cost Adjustment (PCA) would also still be added on top of the other increases. After the first two 5-year contracts, Connexus was not willing to commit to any numbers. 4. GRE would require the elimination of the 5% discount in wholesale power to Connexus for ERMU's load. 5. The inclusion of a territory acquisition moratorium clause may determine how small the margin markup Connexus is willing to negotiate. 6. This option doesn't require bonding or have any financial repayment obligation from ratepayers because there would be no ownership in any plant. Under this scenario, ERMU would be a "renter". 7. Best/worst case scenarios a. Best =competitive rates, good terms with Connexus and GRE, local control of rates, allowed territory acquisition with City urban district growth. b. Worst =noncompetitive rates, high PCAs, no control over wholesale rates, not allowed to grow with City (i.e. same City services not available to all tax-payers). Participation in Big Stone II with ownershib in other beakin~ blant (brobably gas facilities) 1. BSII LOI needs to be signed by July 15tH 2. Supplemental power and services could be a-la-cart. These services wouldn't need to be determined by July 15th, but rather could be determined anytime prior to the termination date of the current power supply contract in late 2018. Most likely supplemental peaking would come from gas facilities. The ancillary services could be contracted out.