6.6. ERMUSR 04-05-2007 - Laserfiche WebLink

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Elk River Municipal Utilities 13069 Orono Parkway F.Ik River, MN 55330 April 3, 2007 To: Elk River Municipal Utilities Commission Jerry Takle ,Jerry Gumphrey Jim Tralle From: Bryan Adams Subject: Boiler and Machine Insurance phone: 763.441.2020 Fax: 163.441.8099 The Elk River Municipal Utilities has maintained boiler and machine insurance to cover equipment repair or replacement in case of failure. The equipment covered is the engine/generators at our power plant and landfill gas facility along with our station transformers. Unfortunately, the cost of this insurance continues to rise as well as the deductible. The deductible has gotten so high, I am not sure if it is worth carrying this insurance for our diesel plant facility. This year we received three quotations and the policy needed to be renewed by April 1, 2007. This policy was renewed for this year but we need to make a decision for next year. The insurance companies always wait for the last minute to give quotes so one does not have a lot of time to research alternatives. Attached is a bid tabulation and cover letter for this year's renewal. We stayed with our current carrier, AIG Global-HSB for $43,453. There are very few boiler-machine insurance companies and if you drop their coverage, it is unlikely they will bid in the future. At our diesel plant, no company will cover the 2-1948 Worthington 660kw due to the age. The deductible for the larger Cooper 300kw and Worthington SOOOkw units is $150,000. The only thing we are insuring for is a catastrophic event on the large engine. Staff is asking for authorization to pursue getting boiler and machine insurance quotations without insuring the diesel engine plant for the 2008 insurance year. The value of the diesel plant is the $350,000/yr. we receive from GRE for stand-by generation and local source of 10 MW if the transmission system goes down.