5.4 ERMUSR 10-09-2018 Elk River
Municipal Utilities UTILITIES COMMISSION MEETING
TO: FROM:
ERMU Commission Tom Sagstetter—Conservation and Key Accounts Manager
MEETING DATE: AGENDA ITEM NUMBER:
October 9, 2018 5.4
SUBJECT:
Landfill Gas to Electric Generation Facility
ACTION REQUESTED:
No Action Requested
BACKGROUND:
As part of the ongoing evaluation of the Elk River Landfill Gas Plant(LFGP) generating facility,
ERMU met with Waste Management on October 5 to discuss the operation of the plant after the
current purchased power agreement, gas purchase agreement, and operation and maintenance
contracts expire October 31, 2022.
The future operation of the facility post existing contracts is a significant factor because ERMU
needs to spend considerable capital on replacement engines in late 2018 or early 2019, and again
in October 2020,that will still be in service well after the contracts end on October 31, 2022. The
lifetime of the equipment being replaced is estimated to be 60,000 hours (almost 7 years).
DISCUSSION:
Staff is evaluating different scenarios of operating the facility. These scenarios range from
completely closing the facility December 31, 2018,to running it through the end of the contracts
on October 31, 2022. For each scenario, other than closing the facility in 2018,the decisions on
future operations significantly impact the decisions to spend considerable funds on engine
replacements.
Staff is working with Waste Management to determine if ERMU will have access to landfill gas
to continue operation of the generation facility after the existing contracts expire. There are also
options where Waste Management could purchase the existing facilities, including the building
and generation facilities that still need to be explored. If the site is completely shut down,ERMU
would be responsible for site remediation costs.
The various scenarios evaluated to date reflect a positive position both financially, and from a
community value for the partnership through the end of the contracts between Sherburne County,
Waste Management, and ERMU. There are still many questions that need to be answered about
the future. Moving forward staff will work to address some major questions that will impact the
viability of the facility through 2022 and beyond. The questions that will be addressed in the
action plan are:
1) Will ERMU have access to the LFG to operate the existing facility beyond October
31, 2022
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2) Is Waste Management willing to purchase the existing building and/or generation
facilities from ERMU
3) Is Waste Management willing to renegotiate the LFGP purchase contract
4) Is Waste Management willing to renegotiate the Operation and Maintenance Contract
5) If the facility is to be shut down what would the site remediation costs be
6) What other parties may be interested in the LFGP electric production after 2022
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