March 5, 2007

Delano to participate in energy transmission project

By Ryan Gueningsman
Managing Editor

As a city grows, the need and demand for energy grows along with it.

Delano City Council met in joint session Tuesday night with the Delano Water, Light, and Power Commission to discuss its participation in a transmission project.

Transmission lines act as “freeways” for energy, and are used to bring energy from power plants to different areas. Very few transmission lines have been built in the last 30 years.

Delano Municipal Utilities Manager Hal Becker said when the city purchases energy, it has to pay a transmission fee for the use of a transmission system for transporting energy from its origin back to Delano.

“It’s kind of like paying rent,” Becker said. “It’s renting to use the lines to get energy to Delano.”

Through an effort called CAPX2020, Delano has the opportunity to become a part owner of that transmission system, and receive revenue for a portion of it, rather than simply paying “rent” for the transmission lines each month, and not receiving anything back in the order of funds.

“We will use that revenue to offset our expenses, so we net out at zero,” Becker said. “We want to end up with a lower wholesale cost for energy, which will lower the utility bills that our customers pay – this will be a direct savings to our customers, and help stabilize our rates.”

The water, light, and power commission and the city council approved participation in this project, with the first phase being that of a development phase, Becker said.

“That will determine whether or not we continue with the project,” he said. After that decision is made, the next steps would be actually constructing the transmission lines, which would take place between 2010 and 2012, depending on how long the permitting process takes. Construction would take about two years before being able to transmit power.

It is the premise that it is better to own transmission investments, rather than just being a renter on the transmission grid, Becker said.

Delano is looking at participating with a 345-kilovolt line that would run from Brookings, S.D., to the southeast Twin Cities, plus a related 30-mile, 345-kilovolt line between Marshall and Granite Falls.

“You look for a line where there is a lot of potential use,” Becker said of the Brookings line. He said that line would take care of some congestion along that route. He said it will also allow for more wind generation to get power to the Twin Cities area.

Of the proposed transmission line, Delano would own, of that first project, approximately 5.5 percent of 2.2 percent.

“Our piece of this project is very small, but is in proportion to our transmission needs,” Becker said. Delano is a part of the Central Minnesota Municipal Power Agency, which also includes the communities of Blue Earth, Fairfax, Glencoe, Granite Falls, Janesville, Kasson, Kenyon, Mountain Lake, Sleepy Eye, Springfield, and Windom.

“We have 12 members in our agency, and they’re all participating in this, so each one will have their own pro-rated share of this project,” Becker explained.

The agency will bond and construct the Brookings line, along with several others, and because Delano participates financially, it will receive its share of the revenue back to help cover the development and contruction costs and offset our existing transmission fees.

The capital cost of the Brookings line is $600 million; Delano’s investment in that would be $695,952, with 1 percent of the total investment being issued as a deposit.

Other proposed transmission lines include a 200-mile, 345-kilovolt line between Fargo, N.D., and the St. Cloud/Monticello area, and a 150-mile, 345-kilovolt line between the southeast Twin Cities, Rochester, and La Crosse, Wis.

“This could be a huge project, and very valuable for lowering the cost of energy to the City of Delano,” said Mayor Joe McDonald after the meeting. “We’re always looking for ways we can cut or save money on energy.”

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