Glenwood to study if local power plant makes sense
The city of Glenwood Springs is embarking on a new study to determine if it makes sense to build a local power generation facility as way to offset the ever-increasing costs of purchasing electricity from wholesale providers.
City Council recently gave the green light to seek proposals for a study to evaluate the feasibility and cost of building a local power plant. Such a facility could be either natural gas-fired or use a range of renewable technologies such as bio-mass, solar or wind.
“Such a study should help the city evaluate future power supply options beyond the current contract with MEAN,” Glenwood Springs Public Works Director Robin Millyard said in a January memo to council, referring to the city’s wholesale power purchase agreement with the Municipal Energy Agency of Nebraska.
“This study would look at various generation and purchase options, including permitting, staffing, operation and maintenance issues, cost of construction, transmission, backup power supply and the overall cost competitiveness of the various supply options,” he explained.
The move comes after double-digit increases in the wholesale cost to the city to purchase power from MEAN in both 2013 and 2014, resulting in a significant hike in city electric customer rates of late.
MEAN’s annual wholesale rate adjustment in April is expected to be around 2.5 percent, according to City Manager Jeff Hecksel.
The cost of the feasibility study is estimated to be between $30,000 and $60,000, which would come out of the city’s electric utility fund.
“I would like to see us think a little outside the box, and begin to divorce ourselves from MEAN at some point,” Councilman Stephen Bershenyi said during a recent discussion. “This is urgent, and is something we really need to prioritize.”
The study will most likely look at everything from a smaller 2- to 5-megawatt facility that could offset peak demand times, when the cost to the city under its 2013 contract with MEAN is higher, to a much larger 25-50 megawatt plant.
A larger plant could essentially power the city’s entire electric utility needs, but running a larger plant does have some “downside,” Millyard said, in terms of operating costs and the continued need to have a backup power supply.
The city also recently received an analysis of the costs associated with its purchased power agreement with MEAN and recommendations from its contract energy conservation program manager, Clean Energy Economy for the Region (CLEER).
CLEER’s study found that 38 percent of the city’s total wholesale power cost comes from MEAN’s new peak demand charge that was included in the 10-year contract signed in 2013.
“The peak demand charge is placing a financial strain on Glenwood Springs Electric,” the report concluded.
Those peak demands come mostly in the summer months, when the regional grid price for peak power is also highest. That’s also when increased solar generation capacity could help offset some of that grid demand, according to the report.
The city’s policy of including 100 kilowatt hours of electricity as part of the monthly customer service fee is also costing the city more than $700,000 per year in lost revenue, and should be revisited, CLEER recommends in the report.
City Council members said they want to take a closer look at the recommendations included in the CLEER report but also would like to proceed with the feasibility study for larger-scale local power generation.
“I would like for us to look at the various options, including wind and solar, but I’m not sure how well that would work here,” Councilman Mike Gamba said.
A smaller plant could serve the purpose to “knock down the peak demand,” he said. Or a larger plant that could move the city toward self-generation may prove to be feasible, he said.
Should the study find that building a local power plant is the way to go, Millyard said it would likely not be something the city would pursue until the end of the current MEAN contract in 2023.
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