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City to sign deposit agreement for wind turbine  

Credit:  By Julie Clements, El Dorado Times, www.eldoradotimes.com 9 June 2011 ~~

El Dorado, Kan. – The El Dorado City Commission approved moving ahead with the wind turbine project at the Waste Water and Reclamation Facility during their meeting Monday evening.

Kurt Bookout, public utilities director, updated the commission on the agreements related to the turbine.

They were now looking at a six-year payback on the turbine based on the formal agreement offered by Westar.

They had the KCC look at the agreement and interpret it, as well as the city’s consultant on the project, and both thought it was a favorable agreement for the city.

The city is still eligible for the loan from the Kansas State Revolving Loan Fund (SRLF) that offers 40 percent loan forgiveness, as well as having a $250,000 grant from the Department of Energy. Those two things would reduce the $2.3 million project down to $1,175,650 that it would cost the city.

The city would have a monthly payment of $6,650 to pay off the project.

Bookout said they would immediately see a positive cash flow.

Mayor Tom McKibban asked what percent of their electric needs this would take care of.

Bookout said they were working on a table that shows their monthly energy usage at the treatment facility, the amount of wind energy generated each month and the difference.

When the turbine is turning, it will generate twice as much electricity as they need. It will turn 35 to 40 percent of the time, running when winds are from seven to 56 miles per hour, and the rest of the time, the city will get one-third off of the cost of electricity they purchase with this agreement.

The payback time had previously been thought to be 10.9 years, but with the new offer from Westar it is thought to be six years.

They also will have a monthly maintenance cost of $1,500 and they will pay $3,000 to $5,000 annually for insurance on the turbine to pay.

Commissioner David Chapin wanted to know what the monthly expenses will be.

Bookout said without it they would be $5 to $5.5 million for electricity over the next 20 years and with it, the cost of the turbine will be $2.4 million over the next 20 years.

“There’s a lot of gray area there that is unexplored and that is what I’m worried about,” Chapin said.

Commissioner Nick Badwey said he thought they had to put some faith into their consultant.

“I also put faith into the KCC’s interpretation that it’s a good deal,” he said.

Commissioner Shane Krause made a motion, with a second by Badwey, for the city to sign the deposit agreement with Nordic, the manufacturer of the turbine, and send them a 97.5 percent refundable deposit of $690,000.

In further discussion, McKibban asked if their rate was based on net metering.

Jim Murfin, city attorney, said the net metering component is not exactly what they had wanted, but most of the issues they sought to have answered had been answered affirmatively by the KCC.

He said there is still some uncertainty about getting the turbine supply agreement completed because it is a complicated, living document, subject to change.

“We won’t know all of the details until we get further into it,” he said.

One change was that the refundable portion of the deposit went from 95 percent to 97.5 percent.

He said with the interpretation of the document from Westar by the KCC and consultant, he thought it warranted going ahead and risking that 2.5 percent of the deposit.

“I ask these questions,” said Chapin, “because it’s a $2 million project. It has nothing to do with staff not being competent in what they’re doing. I feel I have an obligation to the people I represent to ask some questions and they may be tough at times.

“I’m still not confident in my own beliefs that this is as glorious of a deal as it sounds. I think there are some rough waves ahead just from what I’ve learned from my investigation of it, from other parts of the world and other people. I’m just being very open-minded on both ends. This whole decision is all about the future. The one good thing is it shouldn’t cost the taxpayers any money. I just don’t know if they’re going to realize any savings. It can have a great ending and I hope it does.”

The city needed to make a decision soon on the turbine to get one from the company before they shut down their production to move the facility this summer, which would delay the city being able to get a turbine from them.

It will take three months for the city to get through the loan process with the SRLF and the city is nearly ready to start that process.

Although they have to go through the process, the city is on the intended use list for that money in the loan program.

“We think it’s worth it to save the citizens of El Dorado money in the future,” Bookout said.

Murfin also clarified what they are signing is a deposit agreement to make a good faith effort to make the deal happen.

The commission approved the agreement 5-0.

Source:  By Julie Clements, El Dorado Times, www.eldoradotimes.com 9 June 2011

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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