The Granite Falls City Council has called for Barr Engineering, of Minneapolis, to draw up plans and specs to bid for the replacement of the two primary hydro-electric generation turbines at the Granite Falls Dam. In addition, the call for bids will include upgrades to the Supervisory Control and Data Acquisition (SCADA) Systems, sandblasting and painting of the tainter (flood) gates and engineering, design and construction cost.
The resolution passed in a 5-1 vote with Mayor Dave Smiglewski voting in favor along with council members Scott Peterson, Joe Fagnano, DuWayne Gallow and Steve Schaub. Council member Sarina Otaibi was the lone dissenting vote. Council member Steve Nordaune was not present at the meeting.
It was acknowledged that some in the community had expressed an interest in exploring the possibility of removing the dam, and a presentation by City Manager Bill Lavin focused on the potential additional expense that would be required if this were to occur.
Lavin said that preliminary estimates projected demolition costs to be well over $3 million and also noted that the city would be unable to profit from energy generated from its newer Unit 3 turbine, further increasing the city's expense.
A letter from the CMMPA stated that replacement of equivalent energy generated by the Unit 3 Turbine "would put additional cost burden of $200,000 per year on the city of Granite Falls. The utility being public, the ratepayers ultimately have to bear the entire de-commissioning cost and cost of replacement energy, which will add about $20/MWh on its wholesale rate in the next five years. This adder would be about $14/MWh if the state of Minnesota bore 50 percent of the de-commissioning cost."
An inspection of the turbines was commissioned by the council and performed by Barr Engineering last year that determined a need to replace or repair the turbines, with the former proving most cost effective.
Barr estimated that it would run $1.2 million to replace the set. At the time, there were some concerns expressed by the Utilities Commission as to whether the payback on the investment would be worth it if the hydropower efficiency was not increased. The life of the units is expected to be about 40 years.
Subsequently, the city's power purchasing agent, Central Minnesota Municipal Power Agency (CMMPA) was asked to complete an economic feasibility study relative to repairs. Their research was presented to the Utilities Commission on December 26 of last year.
Original findings stated that the replacement would be justified except at the lowest cost level. Later, the formula was tweaked to include only marginal operations maintenance cost and the project outlook was improved. The low MISO rate projected by CMMPA and low marginal operation and maintenance cost scenario predicts net revenue from both capacity and energy sales after 40 years as a projected $720,000 in net revenue.
Page 2 of 3 - Council looked ready to call for plans and specs at their March 4 meeting but held up in order to investigate the expected costs of upgrading or replacing the city's Supervisory Control and Data Acquisition (SCADA) Systems, which collects data needed from various substations, the diesel generating plant and hydro plant.
In doing so, costs to the SCADA system as well as the sanding and painting of the tainter (flood) gates and engineering and construction fees––which were all believed to have been included in the original estimate but were not––have also been added to project costs. The three of these components adds an additional $380,000 to the project, bringing the aggregate project cost estimate to $1.58 million.
Lavin said that the city could fund the project through either 15 or 20-year bond issuances. Including the cost of issuance and other expenses, the $1.74 million principal at a 15-year bond rate would create $646,818 in interest and bring the total cost to the city to $2.386 million dollars. With a 20 year bond, interest payments would just top $1 million.
By arranging the bonds to be top heavy, Lavin said the city could spread out the costs in such away so as to only increase the city's total bond payment under the 15-year bonding scenario from approximately $268,000 per year to $337,000, an approximately $69,000 per year increase. As a result, Lavin said that it was conceivable that the city would not need to increase electrical rates to taxpayers despite the turbine purchases.
Not included are any future dam repair costs. 73 years after it was built in 1911, the city spent $1.2 million to repair the dam in 1984 dollars. If the dam were to last another 73 years before needing repair it would come shortly after the two turbines would have reached their expected length of service.
The city is not yet fully committed to the project as it will still have to award the project after calling for bids. Allowing time for Barr to produce plans and specs, it is expected to be at least eight weeks before bids would be opened.
In other news:
•Council members called for bids on major city street and utility maintenance projects.
The city will receive bids for each project Thursday, May 2. Both bids will be opened at the Monday, May 6 council meeting.
•Council members called for quotes for the removal of the diseased elm trees. In association with the city's 2013 Diseased Elm Tree Removal Program, City forester Dennis Smith will begin identifying and marking diseased elm trees around the beginning of May. In 2012, the city spent just under $5,000 to remove 10 diseased trees as well as six stumps. With half of the diseased trees on public property and the rest on private, the cost breakdown between property owners and the city was $1,328 and $3,615, respectively.
Page 3 of 3 - •In order to allow a portion of the Brookings, South Dakota to Hampton CAPX2020 line to cross an area of Memorial Park on its way to the NSP substation, controlling parties will need to receive a 150 foot easement from the City of Granite Falls.
Council members indicated that they would likely agree to provide the easement, but would first need to pass a resolution that will allow for preliminary geotechnical land surveying.
Should the city agree to the easement, state law would then require that an area of land of equal in size to the number of acres. According to council information, some discussions have taken place with Fagen, Inc., which owns lands directly east of the park.
•Having caught wind that the city would be discarding light fixtures from the old city water plant, Lee Mar Ranch Equine Center Project Director Jerry Ims requested that the city consider donating them to the ranch, which would be able to use the lights in their facilities. Council agreed to do so, once demolition of the old water treatment plant begins this summer.
•Council members voted to support a resolution drafted by the League of Minnesota Cities that would authorize the establishment of municipal street improvement districts. The legislation, if passed, would allow cities to create these districts by collecting fees from property owners to fund maintenance, construction, reconstruction and facility upgrades. No city would be required to form a district.
•Council members authorized the execution of a Professional Services Contract with the Upper Minnesota Valley Regional Development Commission (UMVRDC) for the relocation of the sanitary sewer lift station. For their services, the UMVRDC is to receive $60,000––$48,000 of which will come from a Federal EDA grant and $12,000 of which will come from state flood hazard mitigation dollars.