5.3 ERMUSR 05-13-2025______________________________________________________________________________
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UTILITIES COMMISSION MEETING
TO:
ERMU Commission
FROM:
Mark Hanson – General Manager
MEETING DATE:
May 13, 2025
AGENDA ITEM NUMBER:
5.3
SUBJECT:
ERMU Power Plant Update
ACTION REQUESTED:
Discuss project status
BACKGROUND:
At the March 11, 2025, commission meeting, the Commission received a presentation by LEO A
DALY Architects on potential layouts for a proposed conversion of the Elk River Municipal
Utilities (ERMU) power plant to a history/education center. Staff retained the services of LEO A
DALY to review the building’s structural integrity, identify potential funding sources, explore
potential design layouts, and estimate the potential construction costs. The Commission
decommissioned the plant at their September 10, 2024, meeting via Resolution 24-10.
The Commission reached consensus on the following discussion points:
• Of the three layouts presented, they preferred the combined adult/child centric theme.
• The estimated $1.0M - $1.5M cost to convert the building (after offsets) was too much
to spend at this time.
• The estimated offsets for grants/donations were likely optimistic, which effectively
increases ERMU’s estimated costs.
• The building should be preserved due to its architecture and historical significance to
ERMU but converting it to another use is not feasible at this time.
Staff was directed to pursue the second phase of the preliminary review with LEO A DALY to
fine-tune the layouts/estimates based on commission feedback and to create artist renderings
of the facility for use in future discussions.
DISCUSSION:
Staff recommend additional planning/design efforts be paused until the larger assets identified
below can be removed, including the engines. Once the engines are removed, staff will explore
costs to level the concrete floor (fill in the engine foundations) and remove the interior
conference room and office space. These efforts will enable the building to be used for indoor
equipment and material storage. Estimates to convert the facility to a history/education center
can then be re-evaluated since several of the larger expenses will have been completed. Staff
will provide relevant updates as they are known.
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• Since the March meeting, staff have had several conversations with representatives of
Glencoe Light & Power (GLP) regarding the external fuel tanks and approximately
10,000 gallons of stored diesel fuel. GLP stated they expect to spend $35,000 to
transfer the storage tanks and fuel and another $20,000 to $25,000 to rehab and paint
the tanks. These costs will be split between Glencoe and Janesville, another municipal
utility, as they will each take one of the tanks. In recognizing these additional costs,
ERMU staff has proposed a nominal price of $500 per tank and $1000 for the five-year-
old fuel, pending ERMU Commission approval. The revenue will offset the cost to
retrofit the external filling station so the engines’ internal day tanks can be filled for
demonstration purposes. Our legal counsel at Campbell Knutson has confirmed ERMU
can sell directly to another municipal agency without using an open-bid process.
• Staff are also in talks with representatives of the Minnesota Municipal Power
Association (MMPA) as they are interested in purchasing the plant’s transformer and
recloser. Both items are expected to be used in future renewable energy projects
supporting ERMU’s service territory. Staff have proposed the equipment be sold at
their respective depreciated balances, pending ERMU commission approval. Campbell
Knutson has confirmed that MMPA is considered a municipal agency.
• Staff will begin pursuing options for marketing the large engines in the coming months.
One municipal utility has expressed interest in the largest engine but is not able to take
it for three to five years. Updates will be provided as they are available.
Discussion Questions:
• Is it acceptable to the Commission to offer equipment assets to peer municipal utilities
at potentially below market rate?
• Is it acceptable to the Commission to suspend planning efforts on the future of the
power plant until after the larger equipment assets presented above are sold and
removed?
ATTACHMENTS:
• ERMU Power Plant Renderings
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