Willmar Utilities believes agreement will lead to reduced power costs
WILLMAR — The Willmar Municipal Utilities Commission on Monday approved an agreement with a consultant that the utility believes should reduce Willmar’s overall power costs.
Under the agreement with 10 10 Energy Inc. of Fergus Falls, the consultant will make recommendations concerning Willmar’s power purchases and Willmar’s sale of excess purchased power.
The consultant will also make recommendations on Willmar’s sale of excess behind-the-meter generation, which is power the Willmar utility generates itself and which is not reported to the Midwest Independent System Operator.
Midwest operates the delivery of electric power across much of North America and provides power to utilities including Willmar. Wesley Hompe, Willmar Utilities general manager, said the Midwest market changes every 5 minutes and is very complicated.
“You have to have good forecasting and have a very deep understanding of the market and what happens out there. This is one more step in that process,’’ said Hompe.
The goal of the agreement is to reduce Willmar’s overall power supply costs and benefit from the consultant’s wholesale electric market expertise, whether it’s through education of utility staff or remarketing of excess power, said Hompe.
“10 10 is more active in the market and they are able to make contacts that we are unable to since we aren’t that active in the market. This is a much more regional organization in contacts,’’ he said.
Also through market contacts and expertise, the consultant will educate Chris Carlson, Willmar Utilities power supply broker, on how to perform power scheduling, forecasting and other specific pieces of Midwest participation.
The cost of the contract is $1,800 per month. With the contract, Willmar Utilities could possibly look at the option of retiring a $90,000-a-year contract with Avant Energy of Minneapolis. Hompe described Avant as the “interface’’ between Willmar and Midwest.
Hompe said 10 10’s market expertise is very valuable.
“We’d be able to give them some of our inside information that we have not been able to yet prior to the contract being signed. The educational portion that will be provided through the software and the expertise is worth it right there,’’ he said.
Also, the utility hopes that 10 10’s contacts will help Willmar get a greater return on the sale of excess purchased power from WPPI Energy (Wisconsin Public Power Incorporated) of Sun Prairie, Wis.
In 2012, Willmar signed a 20-year contract with WPPI Energy for 9 megawatts of power to be supplied through Central Minnesota Municipal Utilities Association as part of the association’s larger agreement with WPPI Energy.
The contract was made to take advantage of the opportunity for fuel diversity (U.S.-produced nuclear fuel) and in anticipation of replacing part of a long-term power contract that will expire in two years.
The WPPI contract is expected to supply approximately 23 percent of Willmar’s needs after the other contract expires.
Commissioner Matt Schrupp said the fee seemed like a reasonable amount. Hompe agreed with Schrupp that Hompe and Carlson should evaluate the contract after six months and decide how the utility is benefitting from the agreement.