5.2. ERMUSR 08-12-2003 - Laserfiche WebLink

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Elk River 1. Municipal Utilities 322 King.Avenue phone: 763.441.2020 Elk River.%IN ;5330 iy:Th3.-HL8099 July 28, 2003 To: Elk River Municipal Utilities Commission John Dietz Jerry Takle James Tralle From: Bryan C. Adams Subject: Annual URGE Tests Elk River Municipal Utilities operates and maintains 4 diesel generation units at our power plant. These units are contracted to Great River Energy through a Power Transaction Agreement at the current price of$2.75/kw/month based upon the proven capacity from the annual URGE test. The current contract expires October 31. 2003. The chances of increasing. the payment amount is small. The attached letter reflects this years URGE test results. The URGE test results have steadily increased the past few years due to more maintenance and better training. Again your staff of Mike Price, Adam Freiberg. and Steve Ziemer did a great job performing this URGE test. The capacity results from this test will result in $343.431 in annual payments from Great River Energy. Units one and two are 1948-550kw, black start Worthington units. Unit #2 needs some major work or should be retired. The main bearings are badly worn along with the timing gear. Ignoring the cost ramifications, it has been staffs desire to retire unit#2, salvage the parts and use them in unit #1 when necessary, and replace this unit with a larger engine. The plant substation has a capacity of approximately 12.9MVA. We have physical room to replace unit #2 with a?000kw machine. Installed costs for a good used engine/generator is in the 400kw area or $800.000. Annual revenue from our current Great River Energy agreement at $2.75/kw would be $66,000 or a payback of approximately 20 years at 5% annual interest. Not a good investment financially. Another 21\4W of capacity to keep the essentials of Elk River in power would be nice to have under our control in case of a total power grid failure. We would then have 12MW at the plant and 2.4MW at the Landfill. Our current peaks are 38±MW summer and 25±MW winter. Rolling blackouts will still be necessary. On the other hand, I am not sure if another 2MW is all that significant if we can not carry our entire load. Do you have any other thoughts on this issue?