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PUC denies Heartland power extension

NEW ULM — The New Ulm Public Utilities Commission (PUC) denied the 10-year contract extension with Heartland Consumer Power District (HCPD) to supply energy and demand to New Ulm Public Utilities.

The extension offered a potential $500,000 per year saving, but the commission believed there was a higher risk in extending the contract, citing high capacity costs and shifting trends toward renewable energy for denying the extension.

On January 1, 2010, New Ulm Public Utilities entered a contract with HCPD to provide up to an 18 megawatt (MW) block of energy and capacity for a 20-year term that expires Dec. 31, 2029. Recently, HCPD approached NUPU offering to share the cost-saving from the re-powering of the Wessington Spring wind farm if Public Utilities would extend the current contract an additional 10 years.

Before agreeing to the extension, the PUC decided to conduct a market rate study. The study would include technology pricing for renewables, battery storage and the potential changes in the clean energy requirements in Minnesota.

In October, the market analysis was presented to the PUC commission with a work session to discuss the findings held on Nov. 9. Utilities Director Kris Manderfeld gave the presentation again during the PUC meeting.

Manderfeld said the analysis showed HCPD’s proposed extension would provide low contract prices and allow for savings on wind energy, but the savings would not offset capacity prices. HCPD capacity contract’s price was high compared to other alternatives.

Manderfeld said NUPU was in a position to supply its own capacity and sell any excess.

In addition, current trends suggested Minnesota would be adopting different renewable energy standards. The HCPD has significant coal resources. If a renewable resource standard were adopted by Minnesota, NUPU would be forced to purchase additional energy to meet the standard and selling energy at a loss.

“Altogether it does not seem like a favorable proposal,” PUC President Linda Heine said.

Manderfeld agreed it was not favorable savings, but reminded the commission the current contract with HCPD still went for another nine years. This offer was to extend for another 10 years.

Manderfeld was confident the market analysis was correct and renewable energy would play an important role in future energy production.

“We’re looking at renewable energy. It is coming,” Manderfeld said. “You have states that are going to 100% renewable in 2030 and 2050. I think that you are going to continue seeing the prices going down because the price of wind and solar is cheaper than the price of natural gas.”

City Manager Chris Dalton said there are companies moving to 100% renewable energy. He believed moving NUPU in this direction was beneficial to retaining businesses.

Commissioner Mary Ellen Schanus made the motion to deny the contract extension with a second from Commissioner Sean Fingland. The motion was unanimously passed by the commission.

The PUC authorized a proposal for engineering services from Short Elliott Hendrickson Inc. (SEH) to develop plans and specifications, and provide survey work, design and bidding services to reroute a raw water line.

In August of 2020, the city sold the old water treatment plant on 12th North Street to a private party. Currently, the Water Department has raw water lines for the north well field that are under and around the foundation of this building. As part of the sale, the Utility has requested to remove the raw water lines during the 2021 construction season. The reroute will remove the existing raw water line that runs along the tree line and through the building to under the well access road along the south side of the building.

Engineering services for this project is $21,150. The final project cost is budgeted at $225,000.

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