Potential expansion of generation plant subject of Worthington Water and Light meeting
Commissioners weighed the potential benefits — and risks — of a provision of their reserved capacity agreement with Missouri River Energy Services that could allow for expansion.
WORTHINGTON — Continuing a discussion from last month’s meeting, Worthington’s Water and Light Commission considered a provision of their reserved capacity agreement with electric utility company Missouri River Energy Services.
During their March 6 meeting, the commission approved entering a new agreement with MRES for the capacity at Worthington’s diesel generation plant. Under the new agreement, the monthly capacity payment received by the city would increase from $2.97 to $5 per kilowatt per month beginning June 1, which increases the amount MRES pays the city monthly from $41,580 to $70,000.
While the agreement was approved last month, the additional provision which would allow for the city to expand the generating capacity of their substation and receive $2 per kilowatt per month for 10 years for the expanded capacity, paid upfront by MRES, once again came under discussion this month.
“When our facility was built, it was designed to be expandable and add three more units,” said Worthington Public Utilities General Manager Scott Hain, adding that it would take some renovations to the building in order to fit more generators into the space.
Hain noted there were some benefits to the proposal. With Worthington’s substation having gone through the necessary transmission studies back in 2001 when the facility was built, they’re not running into the same “pain” of getting transmission rights approved now.
“Because we went through that process back in 2000, it’s potentially a good deal for us. Certainly not a bad deal for us,” said Hain. “The other thing that I think about is because our plant theoretically was designed to accommodate the addition of three more units, I can't imagine anybody can do it cheaper than we can.”
However, even with the addition of three new units, operating at either two or three megawatts each, Hain noted Worthington wouldn't be able to add enough local generation to keep the city running “business as usual” in the event of a blackout.
“Back to strictly a financial decision, is that little bit of incremental gain, is that going to be worth what the investment is?” he asked.
Among major risk factors, Hain listed the state’s goal to be carbon-free by 2040, permitting issues, the compatibility of new generators in a facility already over 20 years old, concerns over repaying the upfront lump sum, if the city was unable to stay in the current RCA agreement and the depletion of available cash for what it would take to pull off the expansion.
Hain proposed contacting DGR Engineering, who designed Worthington’s facility, in order to get an estimate of what the actual cost would come to, which the commission members supported.
“At least that way, we've done our due diligence,” said Commissioner Debra Weg.
“Then, once we get that we can come back and look through all this again and see now with an increase in payment with this lump sum, does that make sense for this kind of investment?” added Hain.
In other commission news:
- An unaudited financial report for December 2022 and financial statements and sales reports for March 2023 were reviewed and accepted.
- A transmission interconnection agreement by and between MRES, Western Minnesota Municipal Power Agency, Worthington Public Utilities, and Nobles Cooperative Electric was approved. This agreement is necessitated due to the location of WPU’s new substation and NCE’s new substation within the footprint of the WMMPA-owned Lorain Substation.
- Commissioners approved replacing Shell Street’s four-inch water main with a 12-inch main during the Shell Street reconstruction project. The water main portion of the project was estimated at $240,000 which would come from undesignated reserves from the 2023 water department budget.
- Worthington Public Utilities is the recipient of a certificate of commendation from the Minnesota Pollution Control Agency in recognition of exceptional compliance with its wastewater permit during the 2022 review period, an announcement that was met with applause from the commission.
- Several commissioner members indicated an interest in attending Missouri River Energy Services' 58th annual meeting on May 10-11, 2023, at the Sioux Falls Convention Center.