Board of Public Works backs MoPEP waiver, approves pending sale of pelletizing equipment

Thursday, February 16, 2017

At the request of the Missouri Public Energy Pool, of which Marshall Municipal Utilities is a member, the Board of Public Works voted Thursday, Feb. 16, to support MoPEP's pursuit of a Federal Energy Regulatory Commission waiver.

The waiver would prevent a MoPEP member from being required to purchase power from a generating facility built in a MoPEP city service area. The board's support comes in the form of a request to be put before the Marshall City Council, asking the council to authorize the mayor to sign an ordinance in support of the waiver.

MMU General Manager Kyle Gibbs reported the issue had arisen in a Missouri Joint Municipal Electric Utility Commission (MJMEUC) city due to the Public Utilities Regulatory Policy Act, enacted in 1978.

"You could back then, and really you can now -- somebody can just come in and set a generator anywhere they want, tie it to the power lines and go ahead and try to sell it," Gibbs said. "That doesn't work in Missouri because we didn't pass retail deregulation. It does work in Texas, and there is merchant plants down there. There are a few up here, but there was never really any benefit of that opportunity, but when that was going on, the Federal Energy Regulatory Commission passed a law that says if someone did build a generating plant in your electrical region, and they sold 60 percent of their energy, the utility that had the power lines that they connected to was required to purchase any additional generation they may generate at a deferred cost. ... A deferred cost is basically what it would cost for the energy, instead of being an all-in cost of 68 or 69 cents, it's more like 1.8 cents, 2 cents. So, it's a small amount, but you have to take it. If someone would do that into our service area, or Chilicothe's, or Rolla's, whoever it might be, that would become very problematic with the rules we have in the pool. The pool contract says we can't take it, but this federal rule says we have to take it. So, there is a way to get a waiver, and that would be for the cities in the MoPEP pool to pass an ordinance to defer that responsibility to MJMEUC, the parent organization in Columbia, so therefore someone puts a generator, whether its solar, wind -- really nowadays it's going to be solar and wind -- they put those type plans into your service area and MJMEUC would buy that power, as opposed to MMU."

Additionally, the board granted its approval to move forward with a pending sale of MMU's pelletizing equipment, which is no longer in use. The discussed price was $55,000, pending final agreement. The equipment had been put into service in the mid-1990s to create fuel for the Unit No. 4 coal and natural gas generation unit, which was taken out of service after a boiler explosion in July 2016. Gibbs encouraged moving forward with the offer on the table due to the majority of utilities in the country no longer using that kind of equipment because of clean air regulations.

"It's only worth what somebody was willing to pay and that's what Lindell offered," Electric Production Director Jim Johnson said. "So, I think if it happens, this is going to happen within a few days. ...It's my opinion that we should take the money, if the deal works out, that we should accept the $55,000 for this used equipment. We no longer need it. It's in our way."

Johnson reported if the deal went through that MMU would also receive additional compensation for use of equipment and manpower to load the equipment into shipping containers to be sent overseas.

Similar to no longer using the palletizing equipment, the board had previously considered making the Unit No. 5 generation unit, a coal or natural gas boiler burning unit like No. 4, unavailable to generate power for MoPEP due to the lack of feasibility to run it full time and the risks involved with only running it part of the time. Thursday, the board voted to officially notify MoPEP of its intention to remove the unit from the power pool. The action will cease monthly payments made to MMU by MoPEP for the unit's availability, payments that Gibbs had previously stated MoPEP was already going to reduce significantly in the near future.

Two spending actions also passed Thursday. Requested approval for the purchase of a new backhoe mounted hydraulic breaker was granted, as the board moved to accept the second lowest of three bids, from Martin Equipment for $13,300. Joe Trapp, representing the underground facilities department, reported the low bid did not meet specifications.

In the other spending action, the board reviewed quoted prices for annual well maintenance at the water treatment plant, electing to hire Layne, of Kansas City, Kan., to perform the maintenance this year at an initial cost of $35,105. Environmental Services Director Ginny Ismay reported that would not be the final cost of the project, which would depend on the extent of the repairs needed to equipment like pumps and casings.

"Until you get it out of the ground, you don't know what it's going to cost," Ismay said.

The next meeting of the board is scheduled for Thursday, March 2.

Contact Arron Hustead at ahustead@marshallnews.com

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