The New Ulm Public Utilities Commission Tuesday authorized the issuance of $2,375,000 in general obligation revenue bonds that will fund various projects including construction of the Cottonwood booster station and design work on the proposed New Ulm Wind Farm.
The bonding issue now goes to the City Council for ratification. It also would provide about $700,000 for the Boiler No. 4 conversion project. The commission acted after discussing the utility’s bonding capabilities with the city’s bonding consultant during an informational meeting that preceded the PUC’s regular meeting.
Maintaining a satisfactory level of unrestricted reserve cash has greatly enhanced the utility’s ability to the best possible interest rate on its bonds, bonding consultant Jon Burmeister of Des Moines said.
“New Ulm is in the enviable position of maintaining an A1 bond rating while giving New Ulm almost triple-A rates,” Burmeister said.
The commission took another step in securing less expensive electrical power by voting to apply for at least a portion of the 20 megawatts of Pick Sloan federal hydroelectric power being offered to new customers by the Western Area Power Administration.
New Ulm Public Utilities would be in line for the cheaper power because Heartland Consumer Power District, which becomes NUPU’s primary power supplier in 2009, will act as the conduit for obtaining the power, commissioners were told.
While he couldn’t give specifics yet, Director Gary Gleisner said obtaining the cheaper hydroelectric power should cut the utility’s product costs “quite a bit.”
Although Sargent & Lundy’s estimate of NUPU’s wind farm project costs, at $12.5 million, was considerably higher than the utility’s own estimate of around $10 million, “Sargent & Lundy’s estimate includes $3.8 million for a new substation [for transmission of power generated on the wind farm] which may or may not be necessary,” NUPU’s Planning and Development Engineer Patrick Wrase told the commission.
Wrase said the utility’s estimate was based on sending its generated power through the substation owned and operated by Xcel Energy near New Ulm.
“We will have to depend on Xcel’s substation to get the wind generation power into New Ulm. [To get more independence] we would have to put in a new transformer, but it would have to be built next to the present substation on Xcel land so we’d still have to work through Xcel,” Wrase said.
Otherwise, the prognosis for a wind energy farm just gets better and better, Wrase reported.
According to Wrase, WindLogics Inc. has completed the wind resource assessment of sites for the utility’s local wind project, and “the wind resource assessment has indicated an average gross capacity factor of 44 percent is likely for the site.”
That’s about 10 percent higher than the assessment calculations used by NUPU staff for the preliminary assessment for the project, Wrase said.
“The project continues to be economically attractive, especially if we’re successful at obtaining Clean Renewable Energy Bonds for a portion of the project costs,” Wrase said. The utility is applying for $2.975 million in CREB funding ‘which would be zero percent interest,” Wrase said.
The reason that the utility’s net margin of $309,880 after the first six months is only 28 percent of the utility’s budgeted annual net margin of $1,093,165 is that the utility’s customers are getting really serious about conserving on energy and water, Gleisner told the commission.
“Our sales are flat in almost every department,” Gleisner said.
“Even though we have more homes now, the number of people in each house is smaller. We’re not seeing four or five kids in a house any more,” City Manager Brian Gramentz added.
By Ron Larsen
Journal Staff Writer
25 July 2007
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