The Cook County Community Center was the location of the September 9, 2010 quarterly meeting of the Southern Minnesota Municipal Power Agency, of which the Grand Marais Public Utilities Commission is a member. The member representatives carefully considered how to fairly spread out the cost of capital improvements to its Sherco 3 coal-fired power plant and talked about the emergence of more environmentally friendly power sources in the future.
The quarterly meeting of the Southern Minnesota Municipal Power Agency (SMMPA) was held at the Cook County Community Center Thursday, September 9, 2010, and yes, all the member representatives were in the right place.
The Grand Marais Public Utilities Commission (PUC) is one of 18 municipalities in SMMPA, and every couple of years, they all meet in Grand Marais, far removed from most of the other member cities.
At the quarterly meeting, city representatives discussed how much long-term debt to incur for capital improvements on the Sherco 3 coal-fired power plant, which SMMPA owns with Xcel Energy. In the future, government regulations may require emissions penalties great enough to make coal-fired plants less competitive, in which case future SMMPA customers would probably not appreciate paying debt on a plant no longer in operation. Paying for capital improvements over a shorter period or using cash, however, would leave current SMMPA customers with the bulk of the costs rather than spreading the costs out to future customers as well.
One member suggested that financing for a shorter time period and paying cash for some expenditures would “send a signal” that the agency is looking to the future and would put them in a better position to walk away from the coal-fired plant if it becomes obsolete.
On the other hand, using up cash reserves could result in a need to raise rates when SMMPA has to buy power from another source (as power companies do from time to time) or when the cost of power goes up.
SMMPA’s current financial goals call for reducing its debt-to-asset ratio from 90% to 80%.
At the meeting, the electric rates for next year were discussed, and PUC Chair Hal Greenwood worked hard to keep Grand Marais’ rates down. “I argued for 0% increase,” Greenwood said. “In this economy, I fought hard to hold down the rates!”
Greenwood was successful. He expects that the decision made in Grand Marais to not increase the rates will be ratified at an upcoming annual meeting.
According to City Administrator Mike Roth, the majority of the electric portion of PUC customers’ bills is for buying power from SMMPA. 2011 rates could go up slightly because of the cost of employee health insurance. Roth hoped the rates would not need to be increased at all.
Next time you feel like complaining about your power bill, it might help to think about all the complexities involved in managing a giant power company like SMMPA and to remember that a fossil-free future is in its line of sight already.
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