2.4. ERMUSR 03-13-2013 - Laserfiche WebLink

Home Browse Search

Elk River 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: March 19, 2013 2.4 SUBJECT: Diesel Power Plant Capacity Agreement Amendment with Great River Energy 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. 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. These new provisions took effective January 1, 2013. The capacity payment would be at $0.20/kW-month, substantially lower than the previous contract. This amendment was executed to extend the amended agreement and allow for ERMU analysis of required emission upgrade requirement until after the Environmental Protection Agency (EPA) issued their final ruling on the National Emissions Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines, or the "RICE Rule." This ruling was issued in the Federal Register on January 30, 2013, and is available for your reference at your request. There were also concerns with inconsistences in definitions of emergency generation between the EPA and the MISO that needed to be analyzed. • PBIIEREl BI Page 1 oftNATURE Reliable Public Power Provider P o w r,r o T o SrRvr