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ERMUSR MISC 12-11-2007~, N ~ N ~, ~~ Elk River ^~ ~ ~ Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 December 6, 2007 To: Elk River Municipal Utilities Commission Jerry Takle Jerry Gumphrey Jim Tralle From: Bryan Adams Subject: Miscellaneous Issues Phone: 763.441.2020 Fax: 763.441.8099 Enclosed is the packet for Tuesday, December 11, 2007 commission meeting at 4:00 p.m. To date the water and electric usage remain well above last year at 7.9% and 9.6% respectively. During the week of December 3, 2007 we experienced problems with the tap changer at West Substation Bank #2 and the power plant at the landfill. Troy Adams along with Mike Price and Adam Freiberg did a great job of finding a bent contact in the tap changer and getting the problem resolved. Due to the cold weather and a faulty cooling fan switch, the landfill power plant was off line for about two days. After much searching and trouble shooting, the problem was by-passed and the plant brought back on line. Don Yurecko, plant operator is in the process of permanently resolving this problem. Don, an Elk River Landfill employee, does a good job operating and maintaining this facility and has a lot of personal pride in its success. We are experiencing a large increase in residential foreclosures this past month. Not a good sign for the immediate future. Great River Energy is starting their work on the construction of a peaking plant in Elk River. Attached is the project update from Great River Energy. Also attached is a portion of the project agreement with the City. Paragraph five pertains to us for we will receive $.20/MWH generated with a maximum of $35,000 for five years. The initial intent of this payment is to help off-set the increasing transmission cost we will be seeing from transmission system tariffs through Midwest Independent System Operator (MISO). Attached is an article from the 4t" Quarter National Rural Water Association titled, "The Perfect Storm, the Aging Infrastructure and Work Force." Otsego is drilling a new well and clean Mt. Simon Hinkley sand became available. In an effort to increase our fenced in storage area at our operations facility, we allowed the well driller to deposit this sand at this location. This fill raised and flattened the grade to increase our usable storage area. In this process we ran afoul of some city regulations concerning wet land buffer areas and filling over 1000 CY. We are currently applying for the appropriate variance and CUP to resolve this issue. Attached is the variance narrative. The City and Utilities have only been using this area for depositing fill material for the last 30 years; but now it is an issue. Climate change legislation is going to be a hot topic at both the state and national level. Attached are the following articles about this issue. 1) Article from Wright Hennepin Co-op News letter titled, "Straight talk about climate change and your electric bill." 2) MMUA's Climate Change draft position. INFORMATION Great River Energy Peaking Plant Project Update November 8, 2007 • After obtaining a site grading permit from the City of Elk River Building Department, site grading work began and will continue through early December. • Great River Energy met with Bruce West, City of Elk River Fire Chief, to review preliminary plans for fire protection the week of October 28. Formal drawing submittals will be made after the design is competed early next year. • Great River Energy was told by the Minnesota Pollution Control Agency that we should not expect the air permit until mid-April. Public will have the opportunity to review and comment on the facility's air emissions permit. No hearings are expected, but could be scheduled if there are substantive comments. • As part of the Certificate of Need and site permit there will be public hearings in Elk River December 19 and then in Rosemount December 20. We will be publish notice of these meetings and posting them on the project's page of our website at http://www.greatriverenergy com/projects/plants/erpeak html • After obtaining all necessary permits, construction is scheduled to begin this spring after the tax exemption legislation is enacted. • Feel free to contact me with any further question you or residents might have: David Ranallo Project Communications Coordinator, Great River Energy P: 763-241-2388 C-,~~. NOW, THEREFORE, in consideration of the foregoing premises and for the good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is agreed as follow: 1. Recitals. The foregoing recitals are true and correct and hereby made a part of this Agreement. 2. Responsibility for Legislation. The Cooperative will be responsible for all of its own costs, expenses, and activities related to obtaining the Legislation from the Minnesota Legislature. Except as set forth in Section 3 below, the City will not have any responsibility for preparing, lobbying for, or otherwise pursuing the Legislation. 3. City Cornrnitment. The City agrees that it will provide confirmation of its support for the Project, to the legislators representing constituents residing in the City and any other legislators inquiring of the City. If Legislation is enacted, the City agrees to support the Cooperative in defending against any attempt to repeal the Legislation. 4. In-lieu Payments. The Cooperative shall make a X375,000 annual in-lieu payment to the City for the first five years of plant operation. The first annual in-heu payment shall be due one year from the date the Project is approved for commercial operation. The remaining four payments shall be paid on or before the same date in subsequent years, provided the Cooperative continues to receive the benefits of the personal property tax exemption. 5. Other payments. The Cooperative shall make an annual in-lieu payment to the City of ~---- 0.20 per megawatt-hour generated by the Project for five years of plant operation. T'he calculation shall be based on the actual generation produced in the previous calendar year and such payment shall be made at the same time as the payment described in Item #4 above. A maximum annual cap of 35,000 will apply to this payment 6. Other Considerations. The City needs to obtain not less than 1.4 acres of Cooperative property located adjacent to the City's wastewater treatment facility xhibit 1 The Cooperative agrees to provide not less than 1.4 acres of land to facilitate future expansion of the wastewater treatment facility, the precise size and length of the land to be agreed on by the parties. The land to be provided will be conveyed to the City within one year of the City's notice to Cooperative on its need for the land. The City shall not give this notice with-until four years after e€-the date of this Agreement, unless within those four years the City determines that it will be necessary to expand it's wastewater treatment facility tie--earlier to meet the City's needs and there is no feasible or prudent alternative to expand on the Cooperative land. The transfer of this land requires the Cooperative to relocate some outdoor equipment storage to -another location on its propetty which is northeast of the wasterwater treatment facility (Exhibit 1~ "This new storage locatton will require re-zoning and improvements to support that acttvity. The Cooperative and the City will diligently pursue the re zoning to facrlrtate the transfer of property to the ('itT ~ s r a '-~ `~ ~ 'y)z '? F _ - .~ >~ }+y, ` ,S` ~R , ~ L F ~1L i~ ~ ~ ' ~ an ar . IY PATS . `~ CFA uFW vnaer anae~ seen*en ~~ ~, ~~ ~ a , ..~ .. a v ~" r ~yrw "S C.s ~ _ n ~ .~ ~ ''. x ~r, ~' ~ ~ iY~ t of '~' t •i~,'4Y'" 4' t, _ - ,~ i ; r u is ~ s,. i; ~~.ye~- . 3 yr .u,~r'> c ~ "`~ t?L_ _ ~s`~'.~'~x.' ~~ t,`96.^M 1 ~'. H + ~ v. ~. d ~ '~n ,•,,, },~ ~~ y ' 4.. ~ '~ S`. ~_ .v. • 5 ~ 4 ''X'~~~ ? ~ ~ ~ ' j _Y9 [~~ IY1~Ti$ err T i ~;f ~, +`~r i ' ~ . ~ ~ - kW . ~ ~ s, ~ ~ p~~ar~,~ That was the subject of a recent presentation by Boepple, who spoke to a group of elected officials as well as water and wastewater department professionals. "An aging infra- structure, an aging work force and limited resources could lead to a catastrophic failure of a water system. Talk about the perfect storm. It's coming," she said. This is a problem that many municipalities are facing nationwide. The perfect storm is on the horizon, and utilities, state rural water as- sociations and state governments all need to do their part to ensure the safety and longevity of our drinking water supplies. Many municipalities are facing intense challenges in the efforts to find and hire professional water and wastewater certified operators. The discussion focused on the elected officials' lack of knowledge as to what it takes to run a treat- ment plant, the need for training and raising rates to cover expenses and salaries associated with these positions. "We must be able to prevent disasters such as what hap- pened in Walkerton, Ontario, in May 2000, when the town's water system became contaminated with E. coli bacteria. The contamination caused seven deaths and 2,300 illnesses. Our top priority in any disaster is to get potable water to the people," said Boepple. Several factors can contribute to the perfect storm. One is water system owners or managers who fail to realize the significance of being able to provide safe drinking water, including planning for the future of the system. System op- erators must have the skills and moral judgment to operate a water system, one of the main problems in the Walkerton scenario. It's estimated that more than 50 percent of the nation's water-system operators will leave their jobs in the next five to 10 years. System owners need to start recruiting now and will most likely have to raise salaries to attract qualified op- erators. The public, who often don't want to invest in system maintenance and upgrades, needs to be educated about the importance of a water system. Another factor is elected officials who don't have the time to educate themselves on infrastructure needs and don't support increases in water rates, which ensure that their communities' investments (drinking water/wastewater infrastructure) are protected and maintained. Finally, regulators need to recognize when water sys- tems are not being maintained and operated according to regulations. Pat Scalera, CEO, New York Rural Water Association, said, "The aging infrastructure and aging work force came up at a national meeting back in 2005 and then again at the NYRWA's regional meeting in Brewerton, N.Y., that same year. During a group discussion on `Operators of the Future,' concern was raised on the aging work force and the lack of `•a r --~-~ ","" ~ - ?' y ~t... r2J y ~ t u _ .c,fww~~x't~~~ ~y.~pyid'. T'4~'~.- Y 1, ~ ka~i~~}S .., .7. :. :... ~.- uY5wx'~,.,~y^ ii E ~.. '.=~'` _`~„---._,no....,r_i~ _ ....i-::?:~o'~_.*.w'`e.c~......, operators to fill positions in the water and wastewater in- dustry when our current work force retires." Ask yourself, does the public realize what it takes to re- ceive clean, safe, affordable drinking water? To raise the professionalism of our industry and the level of those dedi- cated individuals who provide safe drinking water daily to their neighbors, families and friends, we must rise to the challenge and do our best to tell the story. A 2005 needs survey commissioned by Congress showed water infrastruc- ture problems in the United States would cost $264 billion to fix. To prepare, it's crucial to educate all of a municipality's stakeholders on the looming crisis. The state of New York has become proactive in ad- dressing these issues. Partnering with many associations, schools, elected officials and groups, it has developed a DVD that discusses these issues, along with interviews with several water professionals across the state and their views on what is required to run a successful water and waste- water facility. The DVD, entitled "Is the Water Rising? - A brief look at New York's Water and Wastewater Systems," was developed and distributed to help educate elected of- ficials. To view the video, go to www.nyruralwater.org/ ElectedOfficialsTraining/ElectedOfficals.cfm. Next, an environmental career brochure was created and distributed to high school guidance offices, vocational techs, colleges, unemployment offices, etc. The goal was to reach out and create interest among students to pursue a career as water and/or wastewater operators. For the New York workgroup, future plans are to focus on educating the public by creating another educational brochure and pos- sibly public service announcements. We all need to do our part. It is important that all ru- ral water associations, utilities and operators get involved. Begin educating your elected officials, your customers and students in your area today. Attend high school career days to promote our industry to a new generation. Consider get- ting booth space at your state fair to encourage individuals to consider the water industry for their future. We're really in this together. O ~/ Elk River Municipal Utilities 13069 Orono Parkway • P.O. Box 430 Elk River, MN 55330-0430 Variance Narrative: Electric Plant Grading Activities Phone: 763.441.2020 Fax: 763.441.8099 Elk River Municipal Utilities is requesting a variance to allow grading within the 25-foot wetland buffer strip on their site located at 1643 Main Street NW. Section 30-1852 of the City Code does allow for the City to grant approval for impacts. The variance is requested to allow for grading within the wetland buffer area along the west side of the wetland for approximately 35- feet. No grading or impacts would occur within the wetland or on the remaining three sides of the wetland. The drainage area to the wetland basin would remain unchanged. The existing topography consisted of a slope of approximately 3.5:1 from an existing storage area on the site. The Utility would like to install a 4-foot high retaining wall near the edge of the wetland and grade a 2:1 slope up to an expanded storage area.. All area within the 25=foot wetland buffer strip would remain as a vegetated surface with the exception of the retaining wal-. The enforcement of the ordinance would cause the Utility unnecessary hardship by not allowing for any additional storage space within their fenced area. Additional space is necessary for securing valuable electrical equipment due to a series of thefts in the recent past. Due to increased material delivery time, more inventory is required which increases our secured area space needs. The site contains floodplain area adjacent to the north and south of the wetland in question. In order to limit fill in this area, which would be outside of the wetland buffer, the Utility is requesting to be allowed to encroach on one side of the wetland. The variance will not have any adverse affect on the neighborhood where the property is situated because the drainage patterns will remain similar to existing and the adjacent topography to the wetland will not be greatly altered. An existing wooded area buffer of approximately 65-feet will remain between the grading site and the property to the east. ~~~rn emu. ~ ~ ~ ~ v.b ~ ~ N ai o 00 '~ G b ~ ~ ~~ ~, '~ o ~ ~ ~ cn co ~ ~ e,o aL~Qt] ~Ti^~~.." ~" ~C o o ~ ° ai o ao °~ o ~~ Q ' : : : : O O ~i G +v ~ id ~ O ~ v .~ ~ ~ ~ ~ ~ 0.,m ~ v ~ •~'~ " ~~.~ y W~ ~ ~ ~ x ~ ~~~~~ ~•~ v v ~~ oo m~ ~ ~ C Cw•,; o v> o o v o ?~w o.x '~ °;c ~ ~ o.n ~ u bOw ~+ .~r Cfx a. ~, 41 v U C1„ '~' ~ ° ~ ~ ti .O O ~"' ~ ~ ~' ~~ ~>,~~ ~, c ~. 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O ° ~ ,~ 0 9 N ~~, ' m< 0 ©" C~ O uw _. ~' 0 0 0 r~ ri n e~ co U W W O U N i" 1 ~ ~ v..'S l ~ a,4t b. t: Climate Change Minnesota's public power systems recognize that the phenomenon of global climate change is the most significant environmental policy issue confronting the nation. There is a growing consensus within the scientific community that the problem is real, that the consequences could be severe, and that release of greenhouse gases from a variety of human activities worldwide is a significant contributor to the problem. We understand the desire of policymakers in Minnesota to take action in an attempt to stem the tide of global warming. Perhaps the most effective action we can take here in Minnesota, the enactment of a renewable energy standard, is already well underway and will establish Minnesota as a national leader in limiting growth of C02 emissions. We do not believe, however, that aMinnesota-specific fossil fuel registration and cap-and-trade program is a workable approach to the climate change problem. Twenty-first century regional wholesale electric markets simply do not lend themselves to a registration and cap-and-trade regime imposed by a single state. In our region of the country wholesale electricity is sold into and bought from a market operated by the Midwest Independent System Operator (MISO), headquartered in Carmel, Indiana. The MISO market covers a region that extends from eastern Montana to western Pennsylvania and from southern Manitoba to the boot heel of Missouri. It is difficult, if not impossible, to determine the precise source of energy that is purchased in the MISO market. All energy is sold at the market clearing price, and for market purposes the exact source of the energy sold to a particular buyer is irrelevant. It would be very difficult for a state like Minnesota to impose a fossil fuel registration and cap-and-trade scheme on atechnology-neutral regional market such as that operated by MISO. Further, the cost and complexity of implementing asingle-state program in a regional market would likely be prohibitive. It would be similarly difficult to impose a fossil fuel registration and cap-and-trade scheme on bilateral contracts. The additional burden of complying with these requirements to sell into Minnesota would likely discourage out- of-state generators from making sales into Minnesota. The result would be a constrained Minnesota wholesale market and higher prices for Minnesota consumers. Further, we are very concerned that-state climate change legislation could be used as a vehicle to stop ongoing projects already in the design and permitting phase. The electric power network has been described as the most complex machine ever devised. Demand and supply must continually be matched on a real time basis every second of every day. It takes years to bring a major new generating facility through the planning, permitting, and construction process. It is unrealistic to assume that emerging technologies will be ready to serve in the near term as acost-effective alternative to projects currently underway. We need to ensure a reliable and cost-effective supply of energy for our families and businesses as we develop our response to climate change. Our policy regarding climate change should be forward-looking. We should focus on shaping the future rather than seeking to rewrite the present. The fact is that it will be very difficult to impose astate-specific solution on a problem that is global in scope. Neither electrons nor emissions are likely to stop at the state line. We believe that Minnesota should concentrate its efforts on pushing for national climate change legislation. Minnesota's public power systems would support and participate actively in these efforts. We believe that effective climate change policy must: • Be national in scope. • Be economy-wide and apply to all industries, including sectors such as transportation and manufacturing as well as electric generation. • Protect the ability of U.S. and Minnesota industries to compete in world and regional markets and consider the competitive impact on jobs. • Allow credit for early actions taken to reduce greenhouse emissions. • Maintain reliability, protect national security and avoid overreliance on any single fuel, recognize the importance to the nation of preserving a diverse mix of electricity generation fuels, including coal, nuclear, natural gas, and all renewable energy sources including hydro. • Support cost-effective energy efficiency measures for all energy uses, including encouraging increased energy efficiency of existing generating resources. • Ensure that tax-based or other incentives for the development and deployment of renewable and clean energy facilities and programs are provided on a comparable basis to all electric industry sectors including public power. • Recognize and address regional differences that can impact the fairness and effectiveness of any program designed to address greenhouse gas emissions. • Include additional and expanded federal support for research, development and deployment of cost- effective technologies to reduce, capture, transform or sequester greenhouse gases from emission sources throughout the national economy. • Ensure that any generation portfolio requirements include all low emission technologies.