Final wind turbine payment reflects lost revenue
WILLMAR -- The manufacturer of Willmar's two wind turbines will receive final payment on its $6.2 million contract.
The $237,400 payment approved Monday by the Municipal Utilities Commission to DeWind Co. of Irvine, Calif., takes into account revenue that the utility lost during various turbine outages since the turbines went into service in September 2009.
DeWind had requested a final payment of approximately $305,000, but the amount was reduced by $67,600 because utility officials and the commission were seeking reimbursement for the lost sales.
The turbines are designed to supply up to 3 percent of Willmar's electrical needs.
Utilities General Manager Bruce Gomm said the contract with DeWind guarantees the units during the first six months to be operational 90 percent or more of the time. After six months, the units are guaranteed to be operational 95 percent of the time.
If the units are less reliable, DeWind is subject to a lost revenue clause, Gomm explained. He said utility officials and DeWind reached agreement on a reimbursement amount for lost revenue.
"We calculated that lost revenue out and submitted that to DeWind and they agreed to take that amount off the final payment that we need to make for the units,'' said Gomm.
The two turbines are located just north of Willmar High School.
As part of the turbine package, the utility has a two-year maintenance service agreement with DeWind. The agreement was approved by the commission at the May 24 meeting. The utility will pay DeWind $35,000 per year per turbine during the agreement period.
The maintenance agreement is a requirement of the warranty, Gomm said. The utility has the option after the two-year period to purchase up to three more years.
In other business, Gomm reported on negotiations to acquire two pieces of property.
One piece of property is owned by Burlington Northern Santa Fe Railway and is located on the north side of Pacific Avenue between Seventh and 10th Streets Southwest. The utility would like to acquire the property and construct a building to store coal for the power plant.
The commission had authorized an offer of $130,000, subject to a clean environmental assessment. Gomm said City Attorney Rich Ronning is working with the railroad to seek permission to conduct the environmental assessment.
Gomm said Ronning is also negotiating the railroad's request to keep Willmar's earnest money, which is money paid as a deposit to show intent to buy or to reserve the land for purchase.
"They want to make the earnest money nonrefundable. We are concerned about that,'' said Gomm. "The purchase is on hold until we resolve those issues.''
The second piece of property is the site of the former Taco Johns store located at the corner of Litchfield Avenue and Ninth Street Southwest. Gomm said the utility would use the property for additional parking and storage. Negotiations are continuing.
Gomm said the utility would be acquiring the building and the equipment. Commissioner Dave Baker recommended the cost of removing the building and the equipment be subtracted from the purchase price.