WILLMAR -- Willmar Municipal Utilities is looking at buying six diesel generators when the lease on the generators expires in September 2012.
The utility has been leasing the units from Ziegler Cat of Minneapolis for $39,600 a month, but the utility has the option of buying the generators for $200,000, General Manager Bruce Gomm told the Municipal Utilities Commission on Monday.
The utility has three diesel generators connected to a substation on the east side and three connected to a substation on the west side. Each unit generates 2 megawatts of energy for a combined total of 12 megawatts.
The units were set up as a temporary power solution and are mounted on semi trailers on wheels. If the decision is made to buy the units, Gomm recommends the units be placed on concrete. He said the installation would be an additional expense, but those costs have not yet been determined.
Purchasing the generators was among the items discussed by Gomm and the commission's three-member planning committee on Nov. 4.
In a recap of the committee meeting, Gomm said the buyout option at the end of the five-year lease is pretty attractive. The current lease was an extension of an earlier five-year lease.
"Our intent always moving forward would be to exercise the option because they provide excellent capacity for us,'' he said. Capacity assures the utility has the power available to cover the load, he said.
"They cover our capacity needs. We need to have enough capacity to cover our load and they fit that bill and serve as peaking generation,'' he said. "So if power prices ever get above $200 a megawatt hour, which sometimes they do or for some reason we're short on generation, they are available for us to run.''
Commission Vice President Dave Baker asked if Ziegler was interested in negotiating the price since the units are in place and connected to the substations.
Gomm said he already asked and Ziegler said it was not interested in negotiating because they know they could pick up and sell the units for a profit.
Besides the installation cost, the utility will be required under new U.S. Environmental Protection Agency rules to buy a catalytic converter for each unit at a cost of $56,600 apiece to reduce air emissions.
Gomm said the generators are in good condition and marketable.
" ... If we purchase them and find at a later date that we didn't need them, we likely would be able to make money on the sale of them,'' Gomm said.
In other business, the commission voted Monday to approve Gomm's request to fill a vacant operator's position in the water department. Due to retirements over a year ago, the utility promoted a water tech person to a water operator and left the water tech position vacant mainly due to tight financial conditions.
"We felt that was a way we could save and we put off some of the maintenance issues and everybody else worked harder. There was some more overtime associated now because of that,'' he said.
Last week, the department had another retirement, leaving two individuals who are unable to keep up with the bare necessities, Gomm said. The pay range is $22.83 to $26.24 per hour based on experience. The skilled position requires a water operator license and experience as an operator.