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Willmar, Minn., Municipal Utilities' Big Stone II payments reduced

WILLMAR -- Willmar Municipal Utilities' monthly principal and interest payments toward the planning process for the cancelled Big Stone II project have been reduced.

The utility received a $50,464 refund from a fund balance and will use the refund to reduce the remaining monthly payments from $18,637 to $13,591, said Bruce Gomm, Willmar Utilities general manager. He said the payments will end Nov. 30, 2011.

"That will be the finalization of the payments of the Big Stone project,'' Gomm told the Municipal Utilities Commission on Monday. Willmar's payments will total about $1.4 million, he said.

Willmar and other utilities that had agreed to buy power from the proposed $1.6 billion, 550- to 600-megawatt plant in eastern South Dakota were obligated to pay off bonds that were sold to finance their share of planning costs.

Big Stone II was cancelled in October 2009 after the lead developer, Otter Tail Power Company, pulled out of the project.

Besides the power plant, the project included buying right of way for transmission lines to bring power into and through Minnesota.

Although the lines were not built, there is still some value to the right of way, said Gomm.

"They still own some transmission right of way that they had secured as part of the planning of the project and there is some value out there,'' he said.

"It's still possible that another entity could come along and purchase those, and if that is the case, then we would be getting a refund of our portion of that project,'' he said, but that possibility has yet to be seen.

"I think it's getting more and more likely, but we don't know exactly how that will be for us,'' he said.

In other business, Gomm and commissioner Jerry Gesch reported on topics discussed at the June 17-22 national conference of the American Public Power Association in Washington, D.C.

Gomm said political analysts who have been in the nation's capital for up to 40 years said they have never seen D.C. as polarized as it is right now, either on the far right or far left, which will make it more difficult to get things passed.

Gomm said the Nuclear Regulatory Commission discussed Japan's Fukushima nuclear power plant. All the units of the plant were damaged in a March 11 earthquake.

Gomm said the commission is looking at nuclear plants in the United States because the industry has never planned for failure of multiple units at the same site.

Gomm said he felt the good news is that there are two pending permits for nuclear power plants that the Nuclear Regulatory Commission expects to issue later this year.

"I was afraid this accident would set it back a long time,'' Gomm said. "It has set it back, but it hasn't stopped it.''

In other business, Gomm reported on the status of the six diesel-powered generating units that are leased by the utility. The trailer-mounted units produce 2 megawatts of power each and are used for utility generation needs. Three units are located at the east substation and three are located at the southwest substation.

Willmar has leased the units for the past 10 years and the utility's intent was to buy the units when the lease expires at the end of 2012, said Gomm. However, new Environmental Protection Agency regulations for improvements to reduce exhaust emissions could cost the utility $100,000 per unit.

Gomm said the $600,000 estimated cost "really changes the economics of the purchase.'' The next step is to test the units for those particular emissions and work with the consultant to find out what the true cost to meet EPA standards would be.

David Little
David Little covers the Willmar City Council, Willmar Municipal Utilities and other city news.
(320) 235-1150