2.5. ERMUSR 11-13-2012 - Laserfiche WebLink

Home Browse Search

44h Elk River et Municipal Utilities UTILITIES COMMISSION MEETING TO: FROM: Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager John Dietz—Chair Daryl Thompson— Vice Chair Al Nadeau—Trustee MEETING DATE: AGENDA ITEM NUMBER: November 13, 2012 2.5 SUBJECT: Diesel Power Plant Capacity Credit Agreement BACKGROUND: Included in our current interconnection agreement with United Power Association (UPA), now Great River Energy (GRE), is a power transaction agreement to purchase the generating capacity from ERMU's Diesel Power Plant. This power transaction agreement has been modified since the original agreement, most recently in 2003. The revisions to the agreement occurred on October 31, 2003. These revisions established the agreement to be on an "evergreen" basis with an October 31 termination date and an April 1 termination notice date. The agreement established the capacity credit at $2.75/kW month. Typically our agreement with GRE results in capacity credit payments of approximately$350,000 annually. On March 28, ERMU received notice that GRE wanted to reevaluate the current agreement's fixed capacity credit. DISCUSSION: At the October Utilities Commission meeting, staff was directed to allow the existing contract to expire and start exploring other options. Due to some positive last minute discussions with GRE, an understanding was reached in regards to concerns that ERMU has about yet unknown environmental regulations and that GRE has about changes to the Midwest Independent Transmission System Operator (MISO) planning calendar. In respect to these issues, both parties agreed to and have executed an additional extension establishing a new termination date of May 31, 2013. The new provisions are effective January 1, 2013. With this amendment to the existing contract, ERMU would now be required to submit in writing the estimated production cost per kilowatt-hour prior to the 1 s`of each month. The capacity payment would be at$0.20/kW-month, substantially lower than the existing contract. This amendment would allow for termination by either party effective the first of any month with written notice of termination given at least 31 days prior. By executing this contract, ERMU will have a few more months to consider the EPA required exhaust retrofits while preserving the generations status with MISO. ® 11, 01111111 IT Page 1 of 2 NATURE' Reliable Public Power Provider POWERED To SERVE