Updated: Worthington sewer project costs come in over double $479,694 estimate
The lowest bid for Worthington's 2023 sanitary sewer CIPP project came in at $996,637, exceeding the $570,220 project budget and over double the estimate made by city engineers.
Editor's note: This story has been updated to reflect corrected information from Worthington Public Utilities General Manager Scott Hain.
WORTHINGTON — Bids for Worthington’s 2023 sanitary sewer project came in at over double the estimated cost for the project, as revealed during Monday’s meeting of the city’s Water and Light Commission.
The project will consist of rehabilitation and repair of the city’s sewer system through cured-in-place pipe installation in seven locations in the city of Worthington, including the Homewood Hills area, Burlington Avenue, and Stower Drive. City engineers estimated the project cost at $479,694.
However, the lowest bid came in at $996,637, exceeding the $570,220 project budget allotted in the city’s 2023 budget. Two other bids were received.
“The bids were very close,” said Worthington Public Utilities General Manager Scott Hain. “We’ll see, (from) low bid to the highest bid, there’s only 3% difference.”
Hain said this was the first CIPP project Worthington’s new engineering staff had worked on, and that lack of experience and transition within the staff had likely played a role in the estimate being off. Staff had based its estimate on costs from a 2019 breakdown, and commission members noted that costs have risen substantially over the last four years.
“These projects have been delayed for a few years now,” Hain said, before recommending accepting the low bid and authorizing use of capital project reserves to pay for the overage. “We throw in engineering costs and everything else…we’re probably looking at somewhere in the neighborhood of $1.1 million.”
While Hain said they could reject all the bids and try again next year, Commission member Chad Nixon said it was possible the costs would come back even higher in a second round.
The commission accepted the low bid.
Also during Monday’s meeting, commissioners acted on the city’s reserved capacity agreement with Missouri River Energy Services.
Worthington Public Utilities currently has a reserve capacity agreement with MRES for the output from the diesel generation plant, the terms of which run through May 31, 2029. MRES is currently offering its members a new contract that will extend through 2052.
The city entered a contract with MRES in 2001 when the city’s diesel generators went online. That contract was replaced in 2013.
“A lot of things have changed in the electric sector … with the formation of the regional transmission organizations and the various rules they have for accredited generation,” Hain said. “The other thing that’s happened is the value of this capacity has increased significantly over the last couple of years.”
The city currently receives capacity payments from MRES of $2.97 per kilowatt per month, which comes to approximately $499,000 a year.
The new agreement will increase the monthly capacity payment to $5 per kilowatt per month beginning June 1, which increases the amount MRES pays the city monthly from $41,580 to $70,000.
Additionally, the city will have the option to expand its generating capacity and receive $2 per kilowatt per month for 10 years for the expanded capacity, paid upfront by MRES.
“So we were looking at when our facility was built, it was actually built to be expandable by three more units,” Hain said. However, while additional units would enable the city to keep more people on during the event of a rolling blackout, the added generators wouldn’t be able to service the entirety of the city.
“The other thing that particularly at Minnesota we're a little nervous about is what might happen at the legislature that would potentially prevent us from contracting these units out and actually operating,” Hain said. “It's always a possibility.”
The commission approved the agreement.
In other news:
- Commission approved a contract designating MRES as the entity managing Worthington’s renewable energy certificates on the city's behalf, as part of a program recently implemented by the Western Area Power Administration.
- During the Minnesota Pollution Control Agency’s recent inspection of Worthington’s wastewater treatment facility, no violations were reported.