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PUC plans agreement with energy mgm’t firm to advise on natural gas prices

NEW ULM — The New Ulm Public Utilities Commission (NUPUC) authorized a service agreement and master agreement for Energy Management Services with World Kinect Energy, Inc. for the procurement of natural gas.

In recent years, New Ulm Public Utilities have seen increased volatility within the natural gas energy markets. Staff decided to obtain expertise in this area. Proposals were sent and a presentation was made to the Commission at the Sept. 28, 2021 meeting recommending partnering with World Kinect Energy, Inc. to help staff with energy management, the procurement of natural gas and price risk management.

At this time the New Ulm city attorney and World Kinect Energy Inc. are working out the details on the service agreement and master agreement for Energy Management Services. Staff is requesting that the city manager be authorized to sign the agreement once the attorney is satisfied with the final language. The expected service is to start Jan. 1, 2022.

Before the commission meeting, Utilities Director Kris Manderfeld was asked about possible spikes in gas prices this winter. Manderfeld confirmed prices are higher than last year. In September 2020, gas costs $1.77 per MCF and in October 2021 gas costs $5.50 per MCF.

Manderfeld said this increase is related to demand. In 2020, gas prices dropped significantly because the COVID pandemic restrictions limited demand. As the economy starts to reopen, the demand for natural gas increases and the prices go up.

Manderfeld said the $5.50 price is not unusual for winter months. She said this price was close to the gas rates from 2018. Natural gas prices are not spiking, but are returning to normal after the drop in 2020.

It is because of these dramatic fluxations in gas prices that public utilities take part in a hedging program to keep prices stable. This saves natural gas customers from paying the full price when prices spike, but it also on occasion will pay higher rates than the daily markets.

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Commissioners authorized purchasing the existing fiber-optic connection between city hall and New Ulm utility building.

In 1998, the Utility agreed with Nuvera to lease a point-to-point fiber-optic connection between city hall and the New Ulm Public Utilities building. The lease is $1,500 per year.

In conjunction with other fiber optic projects, the utility is undergoing, staff researched the costs to replace this with Utility-owned fiber optics. Staff also asked Nuvera if they would agree to sell the existing fiber. Nuvera offered an agreement to purchase the existing fiber for $1,500.

The existing lease is an ongoing cost. With fiber optic cost very low, installing utility-owned fiber would pay for itself in a few years and there would be no additional ongoing costs after that. Purchasing the existing fiber optics from Nuvera is the cheapest option and avoids any interruption of service for the utility.

Seeing no downside, the commission unanimously approved the purchase.

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The commission accepted a proposal from H & R Construction Company for the installation of guardrails. The quote is to install 87.5 feet of guardrail with end treatment at the roundabout of State Highway 15 and Front Street to protect guy wires for the transmission line along the off-ramp.

Utility Engineer Dan Pirsig said this came to staff attention after a vehicle hit a streetlight. This streetlight was further away than the transmission line. The change to the roundabout done in 2018 changed traffic in this area creating this conflict. The state has been contacted and has agreed there is a need for a guardrail and will allow placement in their right-of-way. H&R Construction Company’s bid of $9,762.50 is the low bid.

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A quote was accepted from Hjerpe Contracting, Inc. for tiling construction services to install drain tile around the gas building and the interconnect on the KC Road near New Ulm for $44,984.

The gas building at the Hutchinson gas line interconnect on the KC Road has heaved and buckled on the westerly side causing the doors to becoming misaligned. There is noticeable moisture at the upper topsoil. Excessive groundwater is causing movement to the structure of the building through the freeze/thaw cycle causing soil to move poles up and out of alignment.

Pirsig said this quote is to install the first phase of the site correction plan by tiling around the building to remove water and slow movement of the building. At a later time, the foundation will be fixed to preserve the building.

Hjerpe Contracting, Inc. was the low bid for this project.

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