2.4. ERMUSR 08-13-2012 Elk River ...-7.-_-__
III
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Troy Adams, P.E. —General Manager
John Dietz—Chair
Daryl Thompson—Vice Chair
Al Nadeau—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
August 13, 2012 2.4
SUBJECT:
Diesel Power Plant Capacity Credit Agreement
BACKGROUND:
Included in our current interconnection agreement with United Power Association (UPA), now
Great River Energy(GRE), is a power transaction agreement to purchase the generating capacity
from ERMU's Diesel Power Plant. This power transaction agreement has been modified since
the original agreement, most recently in 2003. The revisions to the agreement occurred on
October 31, 2003. These revisions established the agreement to be on an"evergreen" basis with
an October 31 termination date and an April 1 termination notice date. The agreement
established the capacity credit at $2.75/kW month. Typically our agreement with GRE results in
capacity credit payments of approximately $350,000 annually. On March 28, ERMU received
notice that GRE wanted to reevaluate the current agreement's fixed capacity credit.
DISCUSSION:
Due to continuing and progressive discussions with GRE, both parties agreed to and executed an
additional extension establishing a new termination date of November 1, 2012.
ACTION REQUESTED:
Staff recommends the Commission receive the executed Capacity Credit Agreement Notice of
Termination Extension letter.
ATTACHMENTS:
• Capacity Credit Agreement Notice of Termination Extension Letter
RKai 11
Page 1 of 1 NATURE
Reliable Public- 1
Power Provider POWERED T o SERVE
GREAT RIVER
ENERGY'
12300 Elm Creek Blvd•Maple Grove,Minnesota 55389-4718.763-445-5000•Fax 763-445-5050•www.GreatRiverEnergy.com
July 30, 2012
Mr. Troy Adams
Utilities Director
Elk River Municipal Utilities
13069 Orono Parkway, P.O. Box 430
Elk River, MN 55330-0430
Dear Troy:
The purpose of this letter is to extend the notice provision for termination in the current contract
under which Great River Energy (GRE) purchases the capacity and energy available from the
diesel generation units owned by Elk River Municipal Utilities (ERMU). Our goal is to provide a
short additional period of time to work together towards mutually agreeable pricing terms for the
next contract term beginning on January 1, 2013.
The current contract, as amended, is in effect on an "evergreen" basis. The amendments executed
earlier this year provided that for 2012 only, the termination date for the current term was changed
to December 31 and the notice of termination date was extended until August 1. The goal of this
letter is to provide for an additional extension of only the notice of termination date. By returning
one copy of this letter, signed by you and Jon Brekke, the following amendment to the existing
agreement will take effect immediately:
1, Section 1 of the amendment to the contracts dated March 29, 2012 and amended May 30,
2012 is further amended to provide that for 2012 only, the notice of termination date is
extended until November 1. Either ERMU or GRE may provide the other party notice, no
later than November 1, 2012, terminating the contract effective on December 31, 2012.
2. All other terms and conditions of the contract, as amended, will remain in effect as currently
written.
Sincerely,
GREAT RIVER ENERGY ELK RIVER MUNICIPAL UTILITIES
Jon Brekke Al Troy Adams
Vice President, Member Services ;\' "`�d'j — Utilities Director