Willmar Utilities moves to end district heating

WILLMAR - After years of research and discussion, the Willmar Municipal Utilities Commission approved a motion Monday to begin the process of shutting down the district heating system, after over a century of service.

"We've been looking at this, vetting out options. Decisions need to be made based on data," John Harren, utilities general manager, said.

The process will be long one. The commission has approved only the first steps, which includes utilities staff alerting customers and sitting down with the biggest commercial users, to see what they will need to do to switch their properties over to other heating options and how long such projects would take.

"We want to reach out to our commercial customers, to see what those challenges will be. We want to work with our customers," Harren said.

There are 220 district heat customers, both commercial and residential. The heating area includes downtown Willmar and the area just north of the utilities, along Foot Lake. A letter explaining what is happening and the next steps in the process will be mailed to all customers, Harren said.

Minnesota law requires the utilities give customers at least two years' notice before discontinuing a district heating system, to give everyone time to find an alternative.

"That is the minimum amount of time," Harren said.

Even the utilities itself will need to find an alternative, as its main building and service building use the district heating system.

"We are directly affected like other customers," Harren said.

Harren also said Willmar Utilities will be looking into ways to assist customers as they convert their homes and businesses to another heating system.

A cost study by Burns & McDonnell, conducted in 2014, looked at the financial feasibility of the utilities continuing to provide district heating. The numbers did not justify keeping the system operational and the study said it didn't make financial sense for the utilities to be in the heating business, Harren said.

If the utilities had decided to keep district heating, the system would have needed major upgrades.

"We have some capital improvements we need to make to keep it reliable," Harren said.

Such projects would have been very expensive and caused heating rates to nearly double.

"It would have pushed costs of services for users higher than what they could get elsewhere," Harren said.

Also in the mix are the possible upgrades at the power plant itself. The generators at the plant are instrumental in creating the heat used for district heating. However, those generators are over 50 years old. Harren and his staff have been looking into possible replacement generators, but having a district heating system complicates matters.

"District heating limits the choices of our power supply opportunities," Harren said.

The power plant currently uses a combined heat and power system. Those types of units are considerably more expensive than just power units, Harren said.

Now that a decision has been made on the district heating system, Harren said staff will focus on creating an exit plan for customers and closing down the heating system before making any major decisions on the power plant's generation units.

Willmar Municipal Utilities has provided heat since 1913, when the steam exhaust from the power plant was used to heat properties in downtown. The system was converted to hot water in the 1980s.

There are only a few district heating systems left in Minnesota including the cities of Hibbing, Virginia and New Ulm; the University of Minnesota; St. John's University; and, of course, Willmar.

"We're one of the last," Harren said.

1/3: Briana Sanchez / Tribune Joel Braegelman, water and heating supervisor for Willmar Municipal Utilities, talks Tuesday at the utilities' service center building about the eventual switch away from the current hot water heating. The building is one of more than 200 users of the district heating system that will be discontinued.

2/3: Briana Sanchez / Tribune The hot water heating used by the Willmar Municipal Utilities' service center building, shown here Tuesday, will have to be replaced with a different source when the district heating system is discontinued. The Municipal Utilities Commission has approved only the first steps in what will be a long process to shut down the system.

3/3: Briana Sanchez / Tribune The Willmar Municipal Utilities' service center building, shown here Tuesday, is one of the users of the hot water heating provided through the utilities' district heating system. More than 200 customers of the district heating system will need to find a new heating source. The system shutdown will be a long process, and only the first steps have been approved.