Willmar Utilities obligated to continue paying until November 2011
WILLMAR -- Willmar Municipal Utilities is obligated until November 2011 to continue making $22,806 monthly payments toward planning costs of the failed Big Stone II project, according to the head of one Big Stone partner.
Monthly outlays by Willmar and 12 members of Central Minnesota Municipal Power Agency of Blue Earth are paying off bonds that were sold to finance their share of planning costs for the $1.6 billion Big Stone proposal.
The whole idea of financing was to make payments dependable for everybody in the interest of everybody, said Robert Schulte, Central Minnesota chief executive officer. "The benefit is customer rates of our 12 members (and Willmar) are not bouncing around.''
Willmar is not a member of the Central Minnesota power agency but joined the agency in the planning process. Willmar's payment was based on an initial participation of 7 megawatts of power in Big Stone's 550- to 600-megawatt plant. The local Municipal Utilities Commissioners voted to increase Willmar's share to 30 megawatts if the project moved to construction stage.
Willmar was planning to use the 30 megawatts to replace a 30-megawatt contract with Great River Energy. The GRE contract expires in 2015; Big Stone would have begun operation in 2016.
Schulte spoke last week to the Willmar Municipal Utilities Commission. Commissioners have for a couple of months been asking how much longer Willmar will be making payments.
Big Stone was cancelled Oct. 30 after the lead developer, Otter Tail Power Company of Fergus Falls, pulled out and the four remaining partners, including Central Minnesota, were unable to find another utility company to replace Otter Tail.
Schulte said the dollars being paid to wind down the project are coming out about approximately to the dollars that had been financed. He said revenue from the sale of land purchased for the project would offset some of the dollars due from the participants.
"The final amount still is a little bit in play,'' he said. "We still have to pay for the dollars expended for the benefit of the project.''
As of December, Willmar had spent $1,000,936 toward its share of planning costs, according to the utility's accounting department.
Schulte was asked if Otter Tail would be sued for pulling out. Schulte said the idea was discussed, but he said no lawsuit is planned because Otter Tail had the legal ability to pull out, even though the pullout occurred at a critical time and left others "holding the bag.''
Schulte pointed to a 2-inch-thick bound volume of copies of Big Stone contracts and participation agreements going back to 2005 after the project was proposed. He said all the partners had the ability to pull out if they so desired.
"We wish we were building now in spite of the recession. A resource like that is needed,'' Schulte said.
However, he encouraged Willmar to consider joining Central Minnesota in a consortium of utilities and cities interested in looking for long-term power supply needs. He said the entities have a need for 600 to 700 megawatts of power.
Commission President Doug Lindblad suggested some utility staff and commissioners gather information during the initial discussions before making a decision.