Utilities Commission approves development agreement for major power line project
WILLMAR -- The Willmar Municipal Utilities Commission has taken the next step to participate in a long-range, multi-state project to plan and eventually construct a high-voltage transmission line, from which Willmar and other electric utilities can draw power.
The commission approved a project development agreement with Central Minnesota Municipal Power Agency for Willmar to participate in the power line project through Midwest Municipal Transmission Group.
The 345-kilovolt power line from Brookings, S.D., to the Twin Cities is the first of four transmission projects planned by CapX (Capacity Expansion by 2020). CapX is an initiative of transmission-owning electric utilities in Minnesota and parts of North Dakota, South Dakota, Iowa and Wisconsin to expand the electric transmission grid to ensure future reliability.
The Municipal Utilities Commission approved a preliminary commitment on Oct. 23, 2006, to participate in the Brookings-to-Twin Cities project, and has been participating in planning activities as a member of Midwest Municipal Transmission Group to gain investment rights in CapX projects.
This will be the first time utilities like Willmar have had an opportunity to invest in transmission, said John Brinkman, manager of purchasing and power supply for Willmar Utilities.
Brinkman told the commission Monday that the Midwest Independent System Operator, which oversees the transmission grid in a multi-state area, will allow Willmar to receive a 12.38 percent return on its power line investment.
According to Brinkman, every utility invested in the power line will receive power from it. Willmar will not be directly connected to the line, but will receive power from it through the transmission grid, he explained.
The Brookings-to-Twin Cities line is estimated to cost $582.9 million. The cost to Midwest Minnesota participants is $13.156 million, of which Willmar's share is $3,329,525, plus associated development costs.
Under the agreement approved Monday, Willmar agrees to pay $489,000 toward Midwest Minnesota's $1,956,000 development cost.
Willmar and other Midwest participants are being asked to approve agreements between Central Minnesota and Midwest Municipal to validate their participation. The first of these agreements is the project development agreement, which will cover three to five years of planning before construction begins. Construction would take from two to three years.
Central Minnesota has been designated as the transmission owner.
Decisions on financing Willmar's participation will need to be made during the development phase and construction phase, according to general manager Mike Nitchals in a memo to commission members.
Nitchals wrote he has discussed these matters with the city, and the city's bond advisor and bond counsel.
During the development phase, Willmar could either use money on hand or use short-term financing. During construction, Willmar would most likely seek long-term financing with a bond issue, according to Nitchals.
During discussion, the commissioners said they would like to receive information from utility officials on the timing and financial requirements for the CapX project as well as the proposed wind turbine project and possible power plant needs.
Also during the meeting, commissioners welcomed new member Dave Baker of Willmar.
In other business, the commission closed the meeting to discuss the status of labor negotiations.