MUC GM meets with council on current, future projects
WILLMAR -- Willmar Municipal Utilities General Manager Bruce Gomm discussed utility projects and issues with the City Council on Monday. The council was still in session at press time.
In an interview earlier in the day, however, Gomm discussed some issues likely to be raised by council members, like the utility's obligation through November 2011 to continue making $22,806 in monthly payments toward planning costs of the cancelled Big Stone II project.
Monthly outlays by Willmar and 12 members of Central Minnesota Municipal Power Agency of Blue Earth are paying off a loan to finance their share of planning process costs for the $1.6 billion Big Stone proposal.
Gomm said the loan was used to pay for initial permitting, initial design work and some easement work.
"In order to do that work, we took out a loan and that loan had so many years' term for the payments,'' Gomm said. "We're still making those payments, even though the project is cancelled and didn't go on.''
He said the plan initially was that as soon as construction started, any unpaid portion of the planning loan was going to be rolled into the construction loan.
"At that point we would have been able to stop making payments until the plant was completed and we were receiving power,'' he said. "However, since the project was cancelled, now we just have to pay out the term of that loan.''
Gomm said Willmar is using retained earnings, which are similar to private sector profits, to pay its share. He said the utility used retained earnings because the utility had a better year in 2009 than expected.
Gomm said the partners may make a little bit of money by selling the easements for the Big Stone transmission lines.
"If that's the case, if we're able to make some money by selling some of that right of way, then that might reduce the amount of payments that we have to make ultimately,'' he said.
In an update on the two wind turbines, Gomm said the utility continues to work out all the warranty issues associated with the south unit.
"It's had more than its fair share, I think, of warranty issues,'' he said.
The turbine had a major hydraulic issue through the winter. He said some time was required to identify the specific problem. The repair crew kept fixing symptoms and was not able to pinpoint the problem until well into it.
"But they finally have pinpointed that issue and they continue to tweak settings and monitor them, and (the turbines) continue to operate more and more reliably,'' he said.
Gomm said the utility still has not finalized the contract with DeWind, the turbine supplier. He said the utility is completing its maintenance contract and still has concerns that energy production was lost during the warranty period.
"We're still negotiating those items before we make the final 5 percent payment that we're holding,'' he said.
The two turbines were erected last summer and dedicated Sept. 3, 2009. The turbines, which cost nearly $10 million, sit just north of Willmar Senior High School on land the utility is renting from the Willmar School District.
The turbines will produce about 10 million kilowatts per year combined, which totals about 3 percent of Willmar's annual energy needs.
In other business, the council was to discuss possible safety improvements at the Business 71/County Road 24/23rd Street Northeast intersection.
The council received the report from the Public Works/Safety Committee on a meeting that city staff held recently with representatives of the Minnesota Department of Transportation and Kandiyohi County. They met to discuss an alternate design referred to as No. 10 prepared by city staff.
No. 10 was designed as a result of public input received at a hearing on the intersection alternatives. MnDOT and the county analyzed the proposal and continue to feel that alternate No. 3½ is the best solution. Both agencies have preliminarily indicated they would not provide assistance to the proposed No. 10.
The committee report said the state is willing to design and bid No. 3½ with costs being split three ways among the city, council and state.
The committee discussed options and members agreed to send the item to the full council for further discussion with no recommendation.