PUC approves power pact with Heartland
By RON LARSEN Journal Staff WriterNEW ULM - With their doubts erased, New Ulm Public Utilities commissioners voted unanimously Monday night to enter into a 20-year agreement with Heartland Consumers Power District during which time, the South Dakota-based utility is to provide a 15-MegaWatt block of electric power.
Although the HCPD's president's planned trip to New Ulm Monday to provide assurances was scuttled by the weather, a Power-Point presentation explained the make-up of the organization, how Heartland determines its rates and identification of its customers including those in Minnesota. That presentation answered the commissioners' questions and gave them insight into how the firm prices its power, commissioners agreed during a discussion period.
Approval of the pact means that Heartland will begin delivering that block of power to NUPUC, starting Jan. 1, 2010 and will continue to provide that amount of power to the utility until Dec. 31, 2029.
The contract provides for renewal at the end of the initial term for successive five-year periods unless terminated by either party.
The commissioners' first review of the proposed contract, during the commission's December 2008 meeting, bogged down over Heartland's rate terminology.
"As described in the agreement, the W-2 rate will be equivalent to the W-1 rate (which is Heartland's rate to provide full or supplemental requirements power and energy), but without any of Heartland's costs to provide generation reserves," John Knofczynski, Heartland's manager of engineering and operations, wrote in a letter to Gary Gleisner, NUPU's director.
"At this point, the W-2 rate is known. The cost of the reserves (a fixed cost) will then be assigned to the demand charge for the customers taking service under the W-1 rate (i.e., cost of reserves divided by the total annual demand under the W-1 rate)," Knofczynski wrote.
That meant there would be about $10 difference between what NUPUC currently is paying Xcel Energy for its power, NUPU's Planning and Development Engineer Patrick Wrase said.
In other action, the commission authorized the purchase of a new Water Main Emergency Line Tapping/Stopping Unit in the Water/Steam Department.
The commission voted to award the purchase to E Z Valve Technologies with its bid of $50,610.31, including sales tax and shipping. The other bidder, HydraStop Company, was about $11,000 higher, and that bid did not include sales tax and shipping.
Ron Larsen can be reached at rlarsen@nujournal.com
