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Consumers benefit after Willmar Utilities' 2007 power supply cost comes in under budget

WILLMAR -- Willmar Municipal Utilities' 2007 power supply cost came in under budget, thanks to sales of unneeded power by the utilities into the energy market, according to a report to the Municipal Utilities Commission.

WILLMAR -- Willmar Municipal Utilities' 2007 power supply cost came in under budget, thanks to sales of unneeded power by the utilities into the energy market, according to a report to the Municipal Utilities Commission.

The utilities had budgeted $39.56 per megawatt hour in 2007, but the cost came in 82 cents under budget at $38.56 per megawatt hour. The sales helped the utlity keep power costs down for local electric customers, according to officials.

A summary of Willmar's 2007 power supply cost was reported to the commission on Monday by Chris Carlson, purchasing and power supply clerk, and General Manager Bruce Gomm.

Carlson described the budget report as excellent. She said the utilities' mostly sells unneeded energy during times when the demand for power is less.

The budget includes the utility's best estimate of power supply needs; the cost of power contracts (which is fixed and easily defined); the cost of local power generation (which is more variable); the cost of power purchased on the market (which is unknown); and the price available for selling power (which reduces local costs).

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"It's a combination of all those. So when we put the budget together, we do our best guess on where we are, and in 2007 we were able to come in under budget,'' Gomm said.

Also, the utility factors in "down time'' at the Coal Creek Station, a 1,100-megawatt plant in North Dakota and owned by Great River Energy, which is a major supplier of power to Willmar.

Utilities officials usually know ahead of time approximately how long Coal Creek will be down, according to Carlson and Gomm.

For the 2008 budget, the utility estimated the number of days at 72, but Gomm said the exact number is private information.

"Our big-gest concern (for 2008) is that it will likely be an extended outage at Coal Creek,'' Gomm said. "When there is an extended outage, that affects our GRE contract. It's pretty much guaranteed that the cost of that replacement power will be more than what our normal contract is. The challenge is predicting how long it will be out and what that replacement power will cost us.''

In other business, the commission approved a three-year contract with union employees. The contract covers 2007, 2008 and 2009 and provides an annual 3 percent wage increase and some modifications to the current health insurance plan.

In other business, the commission:

- Approved the low bid of $440,464 from Kuhlman Electric Corporation of Versailles, Ky., for purchase and installation of a 9,000-kilowatt substation transformer at the new wastewater treatment plant.

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- Voted to call for bids to furnish and install a new west booster pump station for the water department. The new pump will replace a 30-year-old pump in an underground vault located on County Road 5 north. The new pump will provide additional capacity and reliability and will serve the new industrial park expansion, according to Bart Murphy, water supply and district heating superintendent.

- Voted to write off $12,659 in unpaid bills for the second half of 2007. The write-offs affect five mobile homes, 24 houses, five apartments and three business accounts. Collection efforts continue through collection agencies and liens placed on property.

- Received the 2007 reliability standard report.

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