WILLMAR -- Heartland Consumers Power District of South Dakota is offering to become a power supplier for Willmar Municipal Utilities, but Heartland needs a letter of intent in order to begin negotiations on a long-term power supply agreement.
"We are here to address the opportunities we may have for future power supply,'' according to John Knofczynski, manager of engineering and operations for Heartland Consumers Power District of Madison, S.D. Knofczynski said Heartland has power to sell because the city of Marshall will be ending its contract in 2016 and will have capacity from its four primary power sources.
He said Heartland is talking to other parties interested in buying power and is trying to obtain power supply commitments from them by the end of the year.
A letter of intent is a commitment to negotiate a long-term, 30-year power supply agreement. The agreement sets out the objectives of the parties and a timeframe for committing to negotiations. The letter does not immediately commit Willmar to buying the power.
Knofczynski discussed matter during a presentation Monday to the Municipal Utilities Commission. Knofczynski was accompanied by Steve Moses, Heartland customer relations and marketing manager.
Last month, Heartland notified Willmar Utilities General Manager Bruce Gomm that Heartland was interested in replacing the 30 megawatts of power that Willmar buys under a contract with Great River Energy. The contract expires in five years.
Willmar Utilities officials were pleased with Heartland's interest because Willmar had planned to replace the power supplied under the Great River Energy contract with 30 megawatts from the Big Stone II power plant in eastern South Dakota, but that project folded last fall. The outlook for replacing the power had been uncertain until Heartland stepped forward.
Commissioners asked questions about a possible relationship with Heartland. After the meeting, Gomm said the utility was excited about the opportunity offered by Heartland.
"We were very concerned after we lost the Big Stone II project when that failed that we would have very limited options to replace that power from the GRE contract that expires in 2015,'' said Gomm. "The fact that there is an entity that has come along and said we have power that we could sell you is very exciting.''
Gomm said he hopes to have the letter of intent taken care of in a matter of weeks.
Heartland is a public, nonprofit power district, established under South Dakota law in 1969 to provide low-cost, reliable power and energy services and community development programs to cities and state agencies.
Heartland has 27 customers in eastern South Dakota, one customer in northwestern Iowa and six customers in Minnesota, including the city of Grove City.
In other business, the Municipal Utilities Commissioners received a report on the month-long outage and annual maintenance project at the downtown power plant. The project began April 12 and ended Tuesday, according to Ken Nash, power plant superintendent.
Nash said maintenance included a thorough inspection of the boiler, which can be fired either with coal or natural gas or a combination of the two.
As part of the project, an explosive technique was used to dislodge accumulated coal ash, also called slag, in the boiler. The slag must be removed to allow for heat transfer, Nash said. The slag falls to the grate and is removed.
Nash said the technique has been used in the past and worked well.
"It's interesting to watch, actually,'' he said. "It's kind of a routine thing, but you don't really think about it much until you're doing it and then it's kind of neat.''
The boiler can produce 8 to 9 megawatts on coal or about 17 megawatts with a combination of coal and gas.
The outage was planned in the spring when demand is down for electricity for air conditioning and for hot water for the downtown heating district. Nash said most utilities typically have an outage for plant maintenance in the spring.