Hydro project in Granite Falls floats above partisan divide
Local legislators said a proposal to tap the state's renewable energy fund for $2.75 million to improve hydro-electric generation by the Granite Falls Municipal Utilities at the city dam on the Minnesota River stayed above the partisan divide and won support early in the session. They joined with city officials for a ribbon-cutting ceremony to celebrate the project.
GRANITE FALLS — Local legislators and the city of Granite Falls discovered one issue able to rise above the partisan divide.
A request by the city of Granite Falls for $2.75 million in funding to improve hydro-electric generation by the city’s municipal utility was approved just weeks into the 2020 session. The request went first to the respective chairs of the energy committees in the House and Senate, Sen. Dave Osmek, R-Mound, and Rep. Jean Wagenius, DFL-Minneapolis. In the words of Granite Falls Mayor Dave Smiglewski, it meant pitching the idea to legislators on opposite ends of the conservative to liberal spectrum.
“And they agreed, amazing,” said Smiglewski as he hosted state legislators who had joined to author legislation on behalf of the request: State Sen. Gary Dahms, R-Redwood Falls, and Rep. Chris Swedzinski, R-Ghent, and State Sen. Andrew Lang, R-Olivia, and Rep. Tim Miller, R-Prinsburg.
The legislators and city officials joined as a gray sky dribbled wet snowflakes for a ribbon-cutting ceremony for the project Monday at the hydro-electric powerhouse on the Minnesota River.
“About five percent,” said Marty Seifert, a lobbyist with Flaherty & Hood. That was his evaluation of the prospects for success of the city’s request when he was first approached about promoting it to legislators. Representative Miller said the four legislators teamed up to author separate bills. One bill sought funding for the project in the bonding bill. The other sought funding from the state’s Renewable Energy Fund as part of the overall energy bill.
It’s the latter bill that sailed through the legislature and in the nick of time. The hearing on it was scheduled just before the COVID-19 pandemic brought things to a standstill in St. Paul.
As it turned out, Seifert said the proposal ran into little opposition, but it did require answering “every imaginable question.” The turning point seemed to come when he could assure legislators that fish could go safely downstream through the turbines, much like people passing through revolving doors, he explained.
The funding for the state’s Renewable Energy Fund is provided by Xcel Energy. It pays into the fund as part of the agreement allowing it to store spent nuclear fuel in dry casks at its nuclear facilities in Monticello and Red Wing.
The Granite Falls Municipal Utility is the state’s second-oldest municipal utility, and has long purchased power from Xcel Energy, formerly Northern States Power, according to Smiglewski. The decommissioning of the NSP coal-fired power plant proved the impetus for seeking the legislation, he said.
The plant was originally built in the 1930s and expanded in the 1970s. It has been shuttered for over a decade and is scheduled to be removed in 2022. The plant’s status for taxing purposes was changed last year to a designation of being “fully retired in place.” The change means that Granite Falls no longer sees $112,570 in property taxes the plant paid each year. That's a big loss for the community of 2,900, the mayor said.
Smiglewski said the idea of upgrading the city’s hydro-electric system was pitched to the legislators as a means to make up for the lost tax revenues. The municipal utility will transfer a larger amount to the city’s general fund as a payment in lieu of taxes, thanks to the increased revenues the new generator is expected to provide. The city council increased the amount of money to transfer from the earnings of its municipal electric system by $100,000, from $225,000 in 2019 to $325,000 in 2020.
Granite Falls City Manager Crystal Johnson said the city is currently working with engineers to determine the type of turbine to install. It will replace a turbine that began operations in 1984 but reached its useful life span a few years ago.
The city currently has two generators operating. Adding a third, and larger generator is expected to increase electric generation capacity from 0.8 megawatts to 1.5 megawatts.
Smiglewski said the city had looked at financing the replacement generator, but the payback period was 30 years or longer. He said the new generator will allow the city to better manage hydro-electric generation. It will be able to produce more of its power during high demand periods and help offset the amount of higher-priced electricity purchased from outside sources.
The $2.75 million in funding includes $400,000 for repairs to the powerhouse holding the turbines and their generators. It has been damaged by flooding. The Granite Falls City Council was to call for bids on Monday night for repairing it.