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Cost-of-service study would assist Willmar Utilities in setting rates

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WILLMAR — The Willmar Municipal Utilities will undertake a study to ensure that rates paid by residential, commercial and industrial customers accurately reflect the cost of providing electric and water services.

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The $30,000 study by Dave Berg Consulting of Minneapolis was recommended by the utility’s Planning Committee and was approved Monday by the Municipal Utilities Commission. A cost-of-service study was last conducted in 2008.

“What we’re trying to do is identify what the costs of the different service classes have been. We want to make sure we understand what our input costs, as well as our revenue costs, are,’’ said Wesley Hompe, utilities general manager.

“We need to understand that well enough to then look at our rate structure and take that and move it forward,’’ he said.

Commissioner Matt Schrupp asked Hompe if any significant change can be expected from the cost-of-service study.

Hompe said he has no preconceived expectations on what the rates are going to be before and after the study.

“But looking at our balance sheet, it’s to make sure we have a positive balance sheet. We’ll find out how that is divided up after the results of the study are completed,’’ he said.

The Berg firm was among three firms that submitted study proposals. All had extensive experience and expertise in cost and rate analysis. But the Berg firm submitted the low bid, according to Planning Committee Chairman Dan Holtz.

“The result of this is that they’ll be using and constructing a spreadsheet and this is something (Finance Director Tim Hunstad) and the staff here at Willmar Municipal can use in the future and update,’’ said Holtz. “So I think that’s a great deliverable from that study as well.’’

In other business, Holtz reported that Hompe met with staff recently to discuss the status of the power plant coal shortage. The shortage is causing problems with the utility’s intent to bring the power plant back online after the recent overhaul project.

Holtz said operational constraints are being experienced due to sporadic coal deliveries by BNSF Railway. If deliveries continue this way, the power plant will run a shorter time this year to allow for coal stockpiling.

The utility’s goal is to stockpile 7,000 tons of coal for safe, adequate winter operation.

The delivery situation eased somewhat Monday, however, after BNSF delivered 10 coal cars, with more cars soon, according to Holtz. A utility crew was unloading and stockpiling coal.

“It sounds like we’re starting to get some rail cars in,’’ he said. “We have a thousand tons here today and some on the way. But we had been experiencing sporadic coal deliveries.’’

Holtz also reported that technicians from wind turbine manufacturer DeWind continue to work on repairs to the south turbine.

The unit was shut down April 23 after a bracket for one of the access ladders to the nosecone came loose.

The loose bracket rattled around and broke other brackets that held the nosecone in place, which caused the nosecone to fall off. A date to return the turbine to operational status is yet to be determined.

On another topic, Holtz reported the utility continues discussion with landowners in Priam to purchase 40 acres for construction of a substation. The substation is needed to improve reliability. The utility is currently dealing with the township zoning board, he said.

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David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150
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