WILLMAR -- The Willmar Municipal Utilities Commission has authorized an in-depth study by MCR of Northbrook, Ill., to help the commission decide if the utility should combine its electrical transmission assets with the transmission assets in a multi-state region.
If Willmar's transmission assets are combined with the Midwest Independent System Operator network, the city-owned utility could possibly receive up to half a million dollars a year in revenue from sources that send their power across Willmar's lines.
Willmar Utilities "is leaving from $250,000 to $500,000 a year on the table'' by not being part of the Midwest system, according to Bob Jablon, a Washington, D.C., attorney who specializes in Federal Energy Regulatory Commission issues.
"The premise is Willmar could make more money than we're making currently on those assets, which will go to the general fund and reduce overall costs for our customers,'' said Bruce Gomm, Willmar utilities general manager.
Jablon's belief, reported by staff to Municipal Utilities Commission members on Monday, is similar to the conclusion reached in August 2006 by the consultant R.W. Beck. In a preliminary analysis, Beck said Willmar would benefit significantly by joining Midwest as a transmission owner.
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MCR would more completely analyze the costs and benefits of joining the Midwest Independent System Operator network and address many additional issues not previously studied by Beck.
Willmar has $6.5 million in transmission assets, including a portion of the Granite Falls-to-Willmar 230-kilovolt line and 69-kilovolt loop.
Midwest is in charge of the energy flow in part of the United States, including Minnesota, and part of Canada, said Gomm. Midwest sets the price based on transmission and generation availability and demand.
If there is not enough generation in an area, the price will rise and Midwest sets that price, said Gomm. "They are in control of the energy marketing in those areas,'' he said.
Willmar buys power from Midwest when the cost of generating power locally is greater than the Midwest market or when Willmar's generation is in outage.
Gomm said there's an official process involved to become part of Midwest.
"We will end up probably paying to transmit our power, but we think we'll actually make more money by charging other people using our lines also,'' Gomm said.
Other municipal utilities are also studying the possibility of joining Midwest. Gomm said Central Minnesota Municipal Power Agency is becoming a transmission owner this month on behalf of its members.
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Another issue to be studied will be if Willmar should have Central Minnesota be its transmission owner representative or if Willmar should join Midwest itself.
The cost of the study will be $45,000, plus travel expenses and a 5 percent administrative fee.
Commissioner Dave Baker pointed out the commission has also approved a facilities study and a study of the long-range future of the power plant.
Commissioner Jim Schammel asked if any one company can perform all of these studies.
Wes Hompe, staff electrical engineer, said the utility has been unable to hire one company with expertise in all the areas being studied.
In other business, the commission voted to ask the City Council to amend the city charter to let commission members serve longer terms. The commission is taking its cue from the Rice Memorial Hospital board, which is also requesting permission to let its members serve longer terms.
Utilities Commission members can serve two three-year terms. The term of commission member Marv Kray will expire at the end of the year.
Commission President Bob Bonawitz said the commission's reasons are similar to the hospital board's reasons in that commission members may need months to learn the complexities of the electric industry.
