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Willmar Municipal Utilities seeks to join Missouri River Energy Services

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WILLMAR — After comparing the costs of remaining independent with becoming a member of a joint action agency for power supply purchasing, Willmar Municipal Utilities will now pursue membership with Missouri River Energy Services.

"We are looking at significant cost savings over time," said Commissioner Justin Mattern at Friday's meeting of the Municipal Utilities Commission. According to the cost comparison, Willmar Municipal Utilities would save approximately $1,694,456 in energy costs by 2027 if it joins Missouri River Energy Services rather than stay independent. Those savings would rise to $3,205,841 by 2033, when all of Willmar's current power supply contracts expire and the municipal utility would then be purchasing most of its power through Missouri River Energy Services.

Willmar Municipal Utilities staff also looked at the costs of continuing business as usual, which would include generating its own power. However, that was found to be cost-prohibitive and not a viable option going forward.

Representatives of Missouri River Energy Services attended the Friday meeting to give a presentation on their organization — comprised of dozens of member municipalities in four states that own and operate their own electric distribution systems — and what benefits Willmar could gain by becoming one of its members.

"It assures you of stability, long-term power supply and assurance for your community," said Joni Livingston, director of member services and communications for the organization.

There are membership dues and a buy-in. The one-time buy-in would be between $420,000 and $450,000.

However, because Willmar has outstanding power supply contracts with other suppliers which won't begin expiring until 2027 — and thus will need to purchase only about 20 percent of its power from Missouri River Energy Services for the next several years — the organization has offered a discount through May 2023. Willmar, over about four-year period, would receive a $1.5 million credit on its purchased power costs.

The annual membership dues will total about $16,000, but that amount is similar to what Willmar Municipal Utilities pays today for membership dues to other organizations. If Willmar joins Missouri River Energy Services, it won't have to pay separate dues to those others.

"It is a direct offset," Willmar Municipal Utilities General Manager John Harren said.

Missouri River is also interested in giving financial credit to Willmar Municipal Utilities for Willmar's diesel generation capacity and renewable energy credits from the wind turbines to go toward capacity on the energy market.

"We are really looking at adding renewable resources," said Ray Wahle, director of power supply and operations for Missouri River.

Membership in the joint action agency would provide Willmar with a long list of additional services, including energy efficiency rebate programs, engineering review for large projects, marketing materials, assistance in developing control strategies to reduce peak demand and legislative and regulatory advocacy. Willmar Municipal Utilities currently spends around $1 million a year on similar services.

As a member, Willmar would share in the risk and rewards with the other members when it comes to power supply and resources.

"I think that is even more important recently. The industry has changed," Livingston said.

Missouri River Energy Services has members across Iowa, North Dakota, and South Dakota as well as Minnesota, including Hutchinson, Marshall, Alexandria, Worthington and Benson.

"There are many similarities between our other members and Willmar," Livingston said. "Joint action means working together on issues. Our members work together through Missouri River Energy, but they also share ideas and resources between themselves as well."

As a member, Willmar would retain ownership of its transmission assets as well as the ability to own limited local renewable generation.

"We want our members to keep their local presence, control and reliability but still gain support and resources from the larger group," Livingston said. "Our goal is to not take anything away from any municipal utility. We want them to operate their own utility. We want to provide the support to allow everyone to do that."

The next step in the process of becoming a member of Missouri River Energy Services is to draft an agreement.

"We're hoping Willmar will become our next member," Livingston said.

Any agreement will have to come back to the Utilities Commission for approval.

"And the work begins," Municipal Utilities Commission President Carol Laumer said.