4.1. ERMUSR 12-08-2015 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Mike O'Neill—Technical Services Superintendent
John Dietz—Chair
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
December 8,2015 4.1
SUBJECT:
Environmental Pollution Agency Rules affecting ERMU's Diesel Generation Facility
BACKGROUND:
In preparation for the termination notice deadline of December 31St 2015, for the evergreen
annual renewal of ERMU-GRE Capacity Agreement with Great River Energy(GRE) in regards
to the Diesel Engine Power Plant,Elk River Municipal Utilities (ERMU)has been working with
GRE to determine whether or not ERMU will continue to allow GRE to use the ERMU power
plant in their MISO (Midcontinent Independent System Operator)market portfolio.
DISCUSSION:
The following information is submitted for your review:
1. In review of new Environmental Protection Agency(EPA)rules relating to reciprocating
internal combustion engines(RICE) staff has determined that it is in the best interest of
ERMU and its customers to terminate the ERMU-GRE Capacity Agreement.
Termination notice given by December 31St 2015 will allow ERMU to avoid significant
and costly emission upgrades for this generation facility. These upgrades are project to
cost between $300,000 and$400,000. Giving termination notice means that GRE will
remove the generation on May 315t 2016 from their MISO market portfolio and ERMU
will then no longer receive compensation for this capacity. In 2015 this capacity revenue
will be approximately$20,000.
2. In the future should it be in the best interest of ERMU and its customers to place the
generation back into the MISO market, ERMU staff will then pursue a new contract with
GRE or other power provider and bring that back to the commission for consideration.
ACTION REQUESTED:
Staff recommends the Commission approve termination notice of the ERMU-GRE Capacity
Agreement.
PI / EAEI 11
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