4.1. ERMUSR 06-14-2016 Elk River ,.
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
Elk River Municipal Utilities Commission Tom Sagstetter—Conservation and Key Accounts
John Dietz—Chair Manager
Al Nadeau—Vice Chair
Daryl Thompson—Trustee
MEETING DATE: AGENDA ITEM NUMBER:
June 14th,2016 4.1
SUBJECT:
Landfill Gas Plant Engine Repair and Operational Cost Update
BACKGROUND:
As part of the ongoing evaluation of the Elk River Landfill Gas generating facility ERMU met
with Waste Management and Sherburne County representatives on May 23rd to discuss current
and future operations of the facility. ERMU staff completed a detailed analysis of all costs and
revenues for the facility since it became operational in October, 2002 through the end of the
contracts in September 2022.
DISCUSSION:
Although the recent operational cost trends have been concerning, the key finding of the detailed
analysis is that the Landfill Gas Plant has not been a burden to the customers of ERMU, nor will
it be in the future based on the forecasted costs and revenue used for the meeting on May 23rd
Currently the LFGP is projected to provide revenue that exceeds expenses over the life of the
contracts that end in 2022.
All partners (Sherburne County, Waste Management, and ERMU)agreed that the future
operation and ownership of the landfill gas facility needs to be evaluated with final changes
implemented in 2017 on operations,maintenance, and ownership.
Other key areas that were discussed in the meeting were as follows.
1. The value of Renewable Energy Certificates (RECs)—Currently GRE has all rights to
the RECs since they are purchasing all the energy output. In the Minnesota voluntary
market for RECs,the value is minimal. The RECs from the landfill gas plant would
at the most be worth $12,500 per year. In some markets RECs are of greater value
and they may be of greater value in the future, but currently there is not much value in
Minnesota.
2. The Elk River Landfill has agreed to not invoice ERMU for the landfill gas to power
the plant for the remainder of 2016.
3. Sherburne County representatives are going to internally discuss various options.
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4. ERMU is still working with the League of Minnesota Cities on an insurance claim.
The claim process is contingent on a report from WM detailing how and why the
engine failed.
5. ERMU will continue to research a Sales Tax Refund. Research needs to be done to
determine if the sales tax refund is applicable to this type of operation and
maintenance contract.
6. The cost estimate for the repair of Engine#4 was corrected to reflect $145,000 in
total cost. The previous estimate provided by Waste Management was not the correct
total.
7. ERMU is continuing to research options for the future of the plant including plant
ownership and energy sales into the market after the sunset of the landfill gas plant
purchase power agreement with Great River Energy in 2022.
8. The partners have schedule a meeting for July 21St to follow-up on action items
identified in the May 23rd meeting.
ACTION REQUESTED:
No action is required at this time. ERMU staff will provide updates as information is gathered
and different options are considered.
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