5.6 EMRUSR 08-13-2024Ji
Elk River amft .
Municipal Utilities UTILITIES COMMISSION MEETING
TO:
FROM:
ERMU Commission
Mark Hanson —General Manager
MEETING DATE:
AGENDA ITEM NUMBER:
August 13, 2024
5.6
SUBJECT:
Future of ERMU Power Plant
ACTION REQUESTED:
Discussion Only
BACKGROUND:
Elk River Municipal Utilities (ERMU) has maintained the existing power plant since its
construction in 1947. The original two engines, with a combined generating capacity of 1.1
megawatts (MW) of electricity supplied power to the village of Elk River until 1961 when a third
engine, with a generating capacity of 3.0 MW, joined them. The final engine, with a generating
capacity of 5.0 MW, was installed in 1972. However, by the mid-1970s, large-scale power
generation plants and transmission lines created the availability of inexpensive, reliable power.
By 1978, Elk River met all their power needs through a cooperative purchasing agency. Since
then, the plant has been maintained for auxiliary purposes only.
For the last 40+ years, the engines have run for 60-120 minutes once a month to test their
operational status. Unfortunately, the intermittent, short duration run times associated with
these backup generation test runs are the worst possible scenario for engines of this era. These
engines were built to reach operating temperature and run for long periods of time. The large
temperature swings associated with intermittent runs are extremely tough on the lubrication
and cooling systems. Not surprisingly, costs to maintain the engines have continued to rise.
Additionally, since we do not have full-time staff dedicated to the operation and maintenance
of these engines they will only continue to decline.
In late 2022, staff explored an opportunity via a Midcontinent Independent System Operator
(MISO) emergency demand response (EDR) program to create a revenue stream to offset the
increasing maintenance costs of the engines. The requirements of the EDR program proved too
complex so the enrollment effort was postponed until pending changes were better
understood. Since then, MISO has increased both their reliability criteria, their fees for
noncompliance, and lowered their potential revenue payouts. As such, the EDR program is
considerably less attractive, especially given the current condition (reliability) of our engines.
Lastly, the generators have limited value as a backup power source due to the significant
redundancy within our own distribution network and within GRE's transmission network
achieved over the last 40 years. All our substations have multiple interconnected transmission
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lines and multiple distribution tie -lines between substations which provide for a multitude of
backfeeding capabilities.
DISCUSSION:
Recently discovered reliability issues will require substantial investment to resolve (potentially
exceeding $500K). It is currently unknown whether the engines would start, run, and carry a
sizeable load for any significant amount of time. Staff recommends against investing in the
engines due to their age, overall condition, and relatively low value as an operational asset.
In recognizing that decommissioning the power plant is a significant, permanent decision, staff
request direction on what additional information is needed to assist in making the decision. If
decommissioning is determined to be the best course of action, staff would provide disposal
options and recommendations for the potential use of the building at a future commission
meeting.
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