5.4. ERMUSR 03-14-20006~j
Elk River
Municip al Utilitie s
13069 Orono Parkway
Elk River, MN 55330
March 8, 2006
To: Elk River Municipal Utilities Commission
Jerry Takle
John Dietz
Jim Tralle
From: Bryan Adams
Subject: LFG Update
phone: 763.441.2020
Fax: 763.441.8099
The landfill gas to electric generation project is finally moving ahead. This project
entails adding a 4`h engine/generator to our landfill facility. Attached is the following
information for your review:
1) Amendment to gas purchase agreement between Elk River Landfill &
ERMU
2) Amendment to Operation & Maintenance agreement between Elk River
Landfill & ERMU
3) Amendment to Security Agreement and Financing Statement and revised
Promissory Note.
4) Financial performance which drives the terms & conditions of the above
agreement
The first 3 documents have been drafted and reviewed by our attorney, Ron Black, Waste
Management attorney for their amendments, and Kathleen Heaney for Sherburne County
for the financing agreement. Staff recommends authorization be given to execute these
documents.
At our 12-13-OS meeting, authorization was given to execute the power purchase
agreement between GRE & ERMU to purchase the output for the 4~h engine. A condition
of the power purchase agreement was to secure a qualifying facility status for our landfill
gas facility from FERC. Attached is our application to FERC to self certify as a
qualifying facility. The necessary air permits have also been secured.
With all of the above being completed, the project can now move ahead with a June 2006
operation data. Due to Waste Management time constraints, we have purchased the
engine/generator form them for $396,909 plus freight to be delivered to meet our June
2006 start date. Had we not purchased their engine, which was the lowest price, delivery
would be 48 weeks from date of order.
~/
Elk River
Municip al Utilitie s
13069 Orono Parkway
Elk River, MN 55330
March 6, 2006
Office of the Secretary
Federal Energy Regulation Commission
888 First St N.E.
Washington, D.C. 20426
Subject: Application for Self Certification Qualifying Facility
Gentlemen,
phone: 763.441.2020
Fax: 763.441.8099
The Elk River Municipal Utilities own a landfill gas to electric generation facility in Elk
River, MN. This 3 unit - 2.4 MW facility started operation in Oct. 2002. By June 2006 a 4`~'
800 KW unit will become operational which will expand the total capacity to 3.2 MW.
Attached is an information sheet reflecting the statistics of this facility.
Attached is original and 14 copies of FERC form 556 for application to self certify as a
qualifying facility.
If you need any other information, do not hesitate to call.
Best re ards,
0
Br n Adams, P.E.
General Manager
cc: file
MN PUC
GRE Greg Patten
Deb Walters
Elk River
Municipal Utilities
13069 Orono Parkway phone: 763.441.2020
Elk River, MN 55330 Fax: 763.441.8099
Application to Self Certify as a Qualifying Facility
Part A: General Information
1 a. Full name of applicant
Elk River Municipal Utilities
lb. Full address of applicant
13069 Orono Parkway
Elk River, MN 55330
1 c. Indicate the ownership of the facility
The facility is 100% owned by the Elk River Municipal Utilities.
Sherburne County is providing the project financing with landfill
abatement funds.
Elk River Landfill Inc. is providing the operation and maintenance function
for this facility.
The Landfill gas to operate this facility is purchased from Elk River Landfill
Inc.
Note: Previously, ownership of a Qualifying Facility was restricted to less than 50%
by an electric utility. The energy policy act of 2005 removed this 50%
restriction. Effective 3-17-06 FERC also removed this restriction.
2. Person to whom communications re~ardin~ the filed information
may be addressed to:
Bryan Adams, P.E.
General Manager
Elk River Municipal Utilities
13069 Orono Parkway
Elk River, MN 55330
763 -441-2020
Email: br~~a~nsatel.net
3a. Location of facility to be certified
Elk River Landfill Power Plant
22596 H.W. 169
Elk River, MN 55330
3b. Electric Utilities that are contemplated to transact with the aualifvin~ facilit
a. The output of this Landfill gas to electric generation is received by
Elk River Municipal Utilities 12.47 kv distribution feeder F-65. This
distribution feeder terminates at Elk River Municipal Utilities
substation "North" and the voltage is stepped up to 69 kv.
b. Elk River Municipal Utilities has an all requirements contracted
with Great River Energy. The total power and energy output of this
facility is purchased by GRE. The metering point is directly adjacent
to the facility at 12.47 kv voltage. Delivery is received at 69 kv with
GRE's transmission system at the North substation transmission inter
connection. GRE is a generation and transmission cooperative and
serves approximately 70% of the geographic area of Minnesota.
This facility has black start capability with 3 units, therefore standby
or back up power is not often required. During periods of major
maintenance where all units are taken off line, the Elk River Municipal
Utilities provides necessary back up power.
4. Describe the principal components of the facility
As the municipal solid waste decompose in the landfill, methane gas is
produced. The methane gas is collected by a series of wells constructed in the
landfill and connected together by an underground gas piping system
terminating at a blower and gas flair. The blower places a vacuum in the
wells and gas piping system thereby sucking the methane gas out of the
landfill. The gas not used by the facility is Haired off to the atmosphere. The
wells, gas distribution system, blower, and flair equipment is owned and
operated by Elk River Landfill Inc. The methane landfill gas used by the
facility is purchased by Elk River Municipal Utilities from Elk River Landfill
Inc.
The principal components of the facility include a 5900 sq.ft masonry building
including gas filter room, electrical equipment room, engine room, offices,
and an environmental learning center class room. Environmental learning
center class room is where landfill issues, recycling, energy conservation,
alternate and renewable form of energy are presented to school and
community groups.
A Hanover unit 02-048 fuel skid is used to remove the moisture from the
Landfill gas, filters the gas for particles and increases pressure from 5" water
column vacuum to 5 ps pressure.
The Landfill gas is burned in 3 caterpillar 3516 Gengine/generator sets rated
at 800 kw each, with outdoor radiators and sound suppression. Electricity is
generated at 30 4160 volt and stepped up to 12.47 kv through a 3.5 MVA
transformer. The high voltage switchgear is manufactured by Enercon
utilizing vacuum reclosures and Schweitzer Electronic relay with full
synchronizing capability. The 480 v MCC is manufactured by Culter -
Hammer which provides 480 v power to station equipment. There are no
electric distribution lines, substations, or transmission lines as part of this
facility. The facility also contains a methane detection system and fire alarm
system.
Attached is a fact sheet explaining the above.
4b. Indicate the maximum Bross and net electric Hower production capacity of the
facility
Starting in October 2002, this facility was constructed with 3 - 800 kw units.
In June 2006 the 4`" 800 kw unit will be brought on line. The
engine/generators are rated at 800 kw @ .85 P.F. They typically operate at
820 kw @ .99 P.F. Facility capacity factor is in the 95% range.
Current capacity: 3 x 820 kw - 100 kw (station power) = 2360 kw
Current energy = 2360 kw 365 days x 24 hour x 95% = 19640 mwh
Future capacity 4 x 820 - 134 kw (station power) = 3146kw
Future energy = 3146 kw 365 days x 24 hour x 95% = 26181 mwh
4c. Indicate actual and expected operation dates
1 S` 3 800 kw units -October 2002
4`" 800 kw unit -June 2006
4d. Describe the primary energy input
The energy input is landfill gas only at approximately 500 btu/cf
to 550 btu/cf.
Provide the average annual hourl energy input
Engine generator heat rate is in the 11,600 btu/kwh range. Gas volume is in
the 300 cfm range. Gas btu content is in the 525 btu/cf range.
300 cfm x 525 btu/cf x 60 min = 9,450,000 btu/hr per engine
Or 28,350,000 btu/hr for 3 units.
Energy input is landfill gas only.
6. Discuss any particular characteristics of the facility
None -see above
Part B: Description of the small power production facility
7. Describe how fossil fuel use will not exceed 25% of total annual enemy input
limit
Landfill gas is the only energy input.
8. If the facility reported herein is not an eligible facility
Landfill gas is a eligible fuel to qualify as a qualifying facility.
Part C: Description of the cogeneration facility
This facility is not a cogeneration facility.
Landfill Gas Electric Generating Plant
THE PHYSICAL PLANT
*5100 sq. ft. state-of--the-art power plant
* Houses three 800 kW Caterpillar engine-
generators (room for one more)
* Annual output = 20 million kilowatt-hours
(enough for 15% of Elk River's needs)
* 720 sq. ft. Environmental Learning Center
THE FUEL
*Landfill gas from decomposing garbage
* 52% methane, 47% carbon dioxide, 1% misc.
* Current production rate = 1000 cu. ft./min.
* Estimated output of existing cells is 35 yrs.
* Additional cells will allow for expansion
* Gas collected from 30+ wells at .5 psi vacuum
* Gas is compressed to 5 psi (removes moisture)
and filtered before delivery to engines
THE ENGINE-GENERATORS
* 16 Cylinder, 1150 hp CAT engines
* Designed for continuous use @ 1200 RPMs
* Each engine consumes 330 cu. ft. of gas/min.
* Change oil every 750 hrs. @ 90 gallons
* Engine coolant = 350 gallons
* Est. time before top end overhaul is one year
and before complete overhaul is five years
* Generators are 6-pole, permanent magnet,
4160 volt AC, with output rated at 800 kW
THE CONTROL ROOM
* Houses controls and metering to regulate
generator output voltage and frequency
* Houses breakers and switchgear to connect
each generator to or disconnect each
generator from the distribution system
THE ENVIRONMENTAL LEARNING CENTER
* Meeting room for Energy City activities
* Classroom for energy/environmental workshops for school groups
* Available for group tours of landfill, landfill gas-to-electric plant, and other
Energy City demonstrations. Ca11763/441-2020 for more information.
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AMENDMENT TO SERVICE AGREEMENT
This Amendment to Service Agreement ("Amendment") is made this
day of , 2006, by and between Elk River Municipal Utilities, a
municipal utility corporation, with principal offices at ,Elk River,
Minnesota 55330 ("OWNER"), and Elk River Landfill, Inc., a Minnesota
corporation, with principal offices at 22460 Highway 169, NW, Elk River,
Minneoota 55330 ("CONTRACTOR").
WITNESSETH
WHEREAS, OWNER owns an electric generating facility fueled by landfill
gas (the "Facility") located adjacent to the Elk River Landfill which is owned and
operated by CONTRACTOR;
WHEREAS, the parties entered into a March 21, 2002 Service Agreement
("Original Service Agreement") whereby OWNER hires and contracts with
CONTRACTOR to maintain and service the Facility for OWNER;
WHEREAS, at the time the parties entered into the Original Service
Agreement, the Facility had three engine generator sets ("Original Generators");
WHEREAS, OWNER anticipates adding a fourth engine generator set
("New Generator") at the Facility;
WHEREAS, OWNER desires that CONTRACTOR maintain and service
the New Generator, as well as the Original Generators, and CONTRACTOR
agrees to provide said maintenance and service; and
WHEREAS, the parties desire to amend the Original Service Agreement
as provided in this Amendment and agree that the following terms and conditions
continue the above-referenced Original Service Agreement.
1. New Generator. The parties agree that the Facility, as that term is
used in the Original Service Agreement, is hereby amended to include the New
Generator.
2. Maintenance Services. In exchange for OWNER providing the
compensation set forth in section 3, below, CONTRACTOR agrees to provide
1
Maintenance Services, as that term is used and defined in the Original Service
Agreement, for the Original Generators and the New Generator.
3. Additional Compensation. In exchange for CONTRACTOR
providing the Maintenance Services for the New Generator as set forth in section
2, above, OWNER agrees to make monthly payments to the CONTRACTOR
equal to one and one-third (1 1/3) of the scheduled monthly payment then due as
set forth in section 6.1 of the Original Service Agreement.
The payment provided for in this section 3 shall be due beginning when
the New Generator begins commercial operation.
4. Additional Liguated Damages; Additional Bonus Payments.
The parties agree that when the New Generator begins commercial operation,
the liquidated damages provided for in section 6.5 and the bonus payments
provided for in section 6.6 of the Original Service Agreement shall be amended
and revised to equal one and one-third (1 1/3) of the scheduled annual amount
then due as set forth in sections 6.5 and 6.6, respectively.
5. Adjusted Ceiling On Certain Maintenance Services. The parties
agree that paragraph 17 of EXHIBIT B MAINTENANCE SERVICES TO BE
PROVIDED BY CONTRACTOR Page 2 of 2 to the Original Service Agreement
is deleted and replaced with the following:
"17. The following major repairs or specific equipment failures,
that are not caused as a result of negligence or abuse by
WMN, to the extent that the aggregate cost for the following
does not exceed Four Thousand Dollars ($4,000.00) in any
month and Thirty Two Thousand Dollars ($32,000.00) in any
calendar year, prorated to reflect partial calendar years
during the term:
(a) repair or replacement of the equipment or any
component of the equipment;
(b) repairs to civil structures; and
(c) any conditions resulting from normal `wear and
tear'."
2
6. Confidentiality. The parties agree that and the specific terms and
exact prices contained in this Amendment and in the Original Service Agreement
are confidential and may not be shared with any person or party other than: (1)
the parties' officials, employees, consultants and attorneys who have agreed to
treat these agreements as confidential; (2) the Rural Utilities Service, MAPP,
MISO and any successor organization of these entities; and (3) as required to
comply with applicable law, regulation, court order, lender or regulatory
proceeding. However, the parties agree that a general description of this
Amendment and the Original Service Agreement and an approximate total price
may be shared publicly without consent.
7. Contingency. The obligations, benefits and performance of this
Agreement are contingent upon the New Generator at the Facility beginning
commercial operation no later than July 1, 2006.
8. Additional Terms.
a. In Section 2.1 of the Original Service Agreement, the phrase "for
consideration described in Section 4.1" is deleted and replaced by "for
consideration described in Section 6.1."
b. Section 2.1.B of the Original Service Agreement is hereby deleted.
c. The following Section 2.12 is added to the Original Service Agreement:
Major Overhauls. CONTRACTOR shall perform major overhauls on
the engines as requested by OWNER. CONTRACTOR will provide operating
data, performance history, and recommendations to OWNER to aid in OWNER's
decisions regarding overhaul schedules. The scope of work for a Major Overhaul
is provided in Exhibit D. The parties anticipate a Major Overhaul will be required
on approximately a five year basis. For each Major Overhaul, OWNER and
CONTRACTOR will confirm in writing that a Major Overhaul will be performed by
Contractor pursuant to Exhibit D. Each such confirmation will include the price
and timing for the Major Overhaul. The price to be charged OWNER for Major
Overhauls will be CONTRACTOR's cost.
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d. In Section 6.1 of the Original Service Agreement, "As consideration for
the services provided hereunder" is deleted and replaced by "As consideration
for the Maintenance Services provided hereunder".
e. In Section 6.5, "including without limitation any failure of OWNER to
authorize CONTRACTOR to schedule Major Overhauls in accordance with
CONTRACTOR's recommendations" is hereby added after the phrase "omission
of OWNER".
f. Item 8 is hereby deleted from Exhibit B to the Original Service
Agreement.
Except as amended in the herein Amendment, the parties hereby reaffirm
the Original Service Agreement.
IN WITNESSETH, the parties have executed this Amendment as of the
day and year first-above written.
OWNER:
CONTRACTOR:
ELK RIVER MUNICIPAL UTILITIES ELK RIVER LANDFILL, INC.
By: By:
Its: Its:
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AMENDMENT TO LANDFILL GAS PURCHASE CONTRACT
This Amendment to Landfill Gas Purchase Contract ("Amendment") is
made this _ day of , 2006, by and between Elk River Landfill, Inc., a
Minnesota corporation with principal offices at 22460 Highway 169 NW, Elk
River, Minnesota 55330 ("Seller'), and Elk River Municipal Utilities, a municipal
utility corporation, with principal offices at ,Elk River, Minnesota 55330
("Purchaser).
WITNESSETH
WHEREAS, the parties entered into a March 21, 2002 Landfill Gas
Purchase Contract ("Original Landfill Gas Purchase Contract") whereby Seller
agreed to sell and Purchaser agreed to buy the landfill gas generated from a
landfill owned and operated by Seller;
WHEREAS, at the time the parties entered into the Original Landfill Gas
Purchase Contract, Purchaser's facilities included three engine generator sets;
WHEREAS, Purchaser anticipates adding a fourth engine generator set
("New Generator") to its facilities;
WHEREAS, landfill gas is available from Seller's landfill to satisfy the
operating requirements of the New Generator; and
WHEREAS, the parties desire to amend the Original Landfill Gas
Purchase Contract as provided in this Amendment and agree that the following
terms and conditions continue the Original Landfill Gas Purchase Contract.
Purchaser's Facilities• Purchaser's Generating Facility. The
parties agree that the "Purchaser's Facilities" and the "Purchaser's Generating
Facility," as those terms are used in the Original Landfill Gas Purchase Contract,
are hereby amended to include the New Generator.
2. Landfill Gas. Seller represents and confirms that landfill gas is
available from its landfill to satisfy the operating requirements of the New
Generator.
3. Pricin .The pricing provisions contained in the Original Landfill
Gas Purchase Contract are revised to read as follows:
Year Gas Purchase Price Year Gas Purchase Price
2005 $0.40 2014 $0.50
2006 $0.40 2015 $0.51
2006 $0.45 at commercial operation of 4th Engine
2007 $0.45 2016 $0.52
2008 $0.47 2017 $0.53
2009 $0.47 2018 $0.54
2010 $0.48 2019 $0.55
2011 $0.48 2020 $0.56
2012 $0.49 2021 $0.57
2013 $0.49 2022 $0.57
3. Additional Terms. Except as amended in the herein Amendment,
the parties hereby reaffirm the Original Landfill Gas Purchase Contract.
4. Contingency. The obligations, benefits and performance of this
Agreement are contingent upon (1) PURCHASER obtaining certification of the
Facility as a QF from FERC no later than May 31, 2006; and (2) PURCHASER
entering into a power purchase agreement with Great River Energy which is
approved by its Board of Directors, a Dual Percentage of its All-Requirements
Members, and the Rural Utilities Service. In the event the New Generator is
operational, but the contingencies in this Paragraph 4 have not been met, then
the parties agree that the gas purchase price for the New Generator shall be
$0.40.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESSETH, the parties have executed this Amendment as of the
day and year first-above written.
SELLER: PURCHASER:
ELK RIVER LANDFILL, INC. ELK RIVER MUNICIPAL UTILITIES
By: By:
Its: Its:
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AMENDMENT TO SECURITY AGREEMENT
AND FINANCING STATEMENT
This Amendment to Security Agreement and Financing Statement
("Amended Security Agreement") is made this _ day of , 2005,
between ELK RIVER MUNICIPAL UTILITIES ("Debtor"), and COUNTY OF
SHERBURNE, STATE OF MINNESOTA ("Secured Party").
WHEREAS, the parties entered into a March 19, 2002 Security Agreement
and Financing Statement ("Original Security Agreement") whereby Debtor
granted Secured Party a security interest in certain property and delivered a
promissory note ("Original Note") in exchange for the sum of Two Million Eight
Hundred Sixty and no/100ths ($2,860,000.00) Dollars for use in building a landfill
gas generating facility in Sherburne County, Minnesota (the "Project"). The
amount remaining on such note being the sum of $ as of
WHEREAS, Debtor desires the additional sum of Six Hundred Sixty-One
and no/100ths ($661,000.00) Dollars to fund the purchase and installation of an
additional engine/generator for the Project with additional collateral of Generator
Unit No. 4 with infrastructure necessary for its operation;
WHEREAS, Secured Party agrees to lend the additional money to Debtor;
and
WHEREAS, the parties desire to amend the Original Security Agreement
as provided in this Amended Security Agreement and agree that the following
terms and conditions continue the above-referenced Original Security
Agreement.
Additional Loan. Debtor agrees to take and Secured Party agrees
to make a loan in the principal amount of Six Hundred Sixty-One Thousand and
no/100ths ($661,000.00) Dollars (the "Loan Amount") at a rate of zero percent
interest. Debtor shall provide Secured Party with a Restated Promissory Note
substantially in the form of the attached Exhibit A which reflects the amount
currently due and owing on the Original Note, less credits, plus the additional
Loan Amount. The Original Note shall be deemed fully satisfied, performed, paid
and extinguished upon delivery of the Restated Promissory Note by Debtor to
Secured Party.
2. Secured Property and Financing Agreement. As additional
consideration, the Secured Property granted, bargained, sold, and conveyed by
Debtor unto Secured Party in the Original Security Agreement is hereby
continued in favor of Secured Party as security for the Restated Promissory
Note. As further collateral, the parties agree that Generator Unit No. 4 and its
infrastructure shall be pledged.
3. Discretionary Additional Consideration. The Debtor, in its sole
and absolute discretion, may pay to Secured Party as additional consideration
the following sums to be known as Discretionary Payments:
YEAR AMOUNT
2006 $ 8, 000
2007 $10,000
2008 $12, 000
2009 $12, 000
2010 $12, 000
2011 $15,000
2012 $15, 000
2013 $15,000
2014 $20,000
2015 $20,000
2016 $25,000
2017 $25,000
2018 $25,000
2019 $30,000
2020 $35,000
2021 $40,000
2022 $45, 000
4. Conditions Precedent. The following are conditions precedent to
the loan of monies and the creation of the Amended Security Agreement and
Financing Statement and the Restated Promissory Note:
4.1 Elk River Municipal Utilities shall obtain certification of the Project
as a QF from FERC no later than May 31, 2006.
4.2 The fourth generator at the Project shall begin commercial
operation no later than July 1, 2007.
4.3 Elk River Municipal Utilities shall obtain any necessary
approvals/agreements from Great River Energy.
5. Additional Terms. Except as amended in the herein Amended
Security Agreement, the parties hereby reaffirm the Original Security Agreement.
IN WITNESSETH, Debtor has executed this Amended Security
Agreement as of the day and year first-above written.
SECURED PARTY: DEBTOR:
COUNTY OF SHERBURNE ELK RIVER MUNICIPAL UTILITIES
By:
Its:
By:
Its:
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RESTATED PROMISSORY NOTE
Elk River, Minnesota
2006
FOR VALUE RECEIVED, the undersigned, Elk River Municipal Utilities,
("Borrower"), promises to pay to the order of the County of Sherburne ("Lender"), 13880
Highway 10, Elk River, MN 55330 or at such other place as may be designated from time
to time by the holder hereof, in lawful money of the United States of America, the principal
sum of and /100ths ($ ) (the "Principal
Balance").
There shall be no interest on the unpaid principal balance.
Principal shall be payable under this Note in monthly installments of principal
payable on the first day of each month during the term hereof. Payments shall commence
on , 1, 200_. The actual amount of each monthly payment shall be the prorata
portion of the amount set forth on Exhibit A, line 30, attached hereto.
This Note is secured by a Security Agreement and Financing Statement, the terms
of which are incorporated herein by reference, and any amendments thereto.
This Note may be prepaid in whole or in part at any time without premium or penalty.
Payments hereunder shall be applied first to payment of the amounts payable
hereunder or under the Security Agreement and Financing Statement and any
amendments thereto other than principal, and then to a reduction of principal, except that if
any advance made by the holder hereof under the terms of any instrument securing this
Note is not repaid, any monies received, at the option of the holder, may first be applied to
repay such advances, and the balance, if any, shall be applied as above.
No payment or prepayment shall suspend any required payments of principal or
interest under this Note or reduce the amount of any scheduled monthly payment.
It is agreed that time is of essence of this contract. Upon the occurrence of an
Event of Default under the Security Agreement and Financing Statement or any
amendments thereto, or upon Default in the payment when due and payable of any
principal hereunder, the Lender, may without notice to the Borrower, declare the Principal
Balance, and other charges immediately due and payable.
In the event this Note is not paid when due, Borrowers remedies are limited to those
set forth in the Security Agreement and Financing Statement of even date and any
amendments thereto.
The following are conditions precedent to the loan of monies and the creation of
the Amended Security Agreement and Financing Statement and the Restated
Promissory Note:
1 Elk River Municipal Utilities shall obtain certification of the Project as a QF
from FERC no later than May 31, 2006.
2. The fourth generator at the Project shall begin commercial operation no
later than July 1, 2006.
3. Elk River Municipal Utilities shall obtain any necessary
approvals/agreements from Great River Energy.
This Note shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, administrators, successors and assigns, and shall be governed by
and construed in accordance with the laws of the State of Minnesota.
Elk River Municipal Utilities
By:
Commission Chairperson
By:
General Manager
ermu.pmm~not
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