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Work is continuing to iron out the details with the manufacturer and with Westar for a wind turbine the city wants to put up at the waste water treatment facility.
The El Dorado City Commission received an update on that progress during their meeting Monday.
Westar has given the city a proposal to pay for their excess power generated by the turbine, paying 2.9 cents for it rather than through net metering, for which they would pay the city the same rate for the power as what they are charging.
The city also has the possibility for 40 percent principal forgiveness on the project through the state’s revolving fund loan program and a $250,000 grant from the Department of Energy.
With this scenario of not having net metering, the turbine would show a return on its investment in 10.9 to 11.7 years, with the turbine being rated for a 20-year life span.
With net metering, the city would begin to see that return in about six years.
“This is over a million dollars in free money from the federal government,” said Kurt Bookout, public utilities director.
There also is a time constraint.
The company that will be making the turbine, which is the only company in the United States that makes turbines that meet the requirements the city must meet will be moving its operation this summer and shutting down the plant during that time. There are currently four turbines under construction by them and the city would need to agree to purchase one of those or there will be a much longer wait.
The city attorney is currently going over the deposit agreement with that company, recently having seen the revisions they have made.
What the city wants is a returnable deposit if the net metering is not worked out.
The city would have to pay $1.2 million for the turbine, which would be financed by a 20-year loan from the state, the same as the city used to pay for the waste water plant.
“What will $1.2 million cost us over 20 years?” asked Mayor Tom McKibban.
Llewellyn said if the money was loaned at a 5 to 6 percent interest rate it would be $100,000 a year for 20 years, but they will be getting it at about 2.9 percent so it will be significantly less.
“I think of all of the other things coming up,” McKibban said. “I see all of these millions and millions of dollars put out 20 years. I want to understand the bottom line of what is going on and coming off each year.”
Work is continuing to iron out the details with the manufacturer and with Westar for a wind turbine the city wants to put up at the waste water treatment facility.
The El Dorado City Commission received an update on that progress during their meeting Monday.
Westar has given the city a proposal to pay for their excess power generated by the turbine, paying 2.9 cents for it rather than through net metering, for which they would pay the city the same rate for the power as what they are charging.
The city also has the possibility for 40 percent principal forgiveness on the project through the state’s revolving fund loan program and a $250,000 grant from the Department of Energy.
With this scenario of not having net metering, the turbine would show a return on its investment in 10.9 to 11.7 years, with the turbine being rated for a 20-year life span.
With net metering, the city would begin to see that return in about six years.
“This is over a million dollars in free money from the federal government,” said Kurt Bookout, public utilities director.
There also is a time constraint.
The company that will be making the turbine, which is the only company in the United States that makes turbines that meet the requirements the city must meet will be moving its operation this summer and shutting down the plant during that time. There are currently four turbines under construction by them and the city would need to agree to purchase one of those or there will be a much longer wait.
The city attorney is currently going over the deposit agreement with that company, recently having seen the revisions they have made.
What the city wants is a returnable deposit if the net metering is not worked out.
The city would have to pay $1.2 million for the turbine, which would be financed by a 20-year loan from the state, the same as the city used to pay for the waste water plant.
“What will $1.2 million cost us over 20 years?” asked Mayor Tom McKibban.
Llewellyn said if the money was loaned at a 5 to 6 percent interest rate it would be $100,000 a year for 20 years, but they will be getting it at about 2.9 percent so it will be significantly less.
“I think of all of the other things coming up,” McKibban said. “I see all of these millions and millions of dollars put out 20 years. I want to understand the bottom line of what is going on and coming off each year.”
Bookout also reminded the commission the city will need to spend a lot of money in the sewer collection system. They had talked about spending $250,000 a year to help with the needed maintenance of manholes and sewer lines.
“This is really a great job to help save money on utility bills at the waste water treatment plant so that we can forgo any upcoming rate increases and push back future rate increases,” he said.
He said they were looking for ways to cut their costs in the sewer system.
“The folks at the Kansas Corporation Commission are still very optimistic that we can work out net metering,” Bookout added. “With net metering, our utility bill would essentially go away.”
Bookout also said if they do nothing, with the escalation of energy costs, they would spend about $4.5 million on electricity in 20 years.
“Why is everybody not doing this if it’s such a good deal?” McKibban questioned.
“Someone’s got to be first,” Bookout said.
Also, Llewellyn said not everyone would be eligible for the 40 percent forgiveness and the garnt.
“If you were paying cash, the payback with interest would be a wash,” he said.
McKibban also wanted to know what assurances the city had that they would get this money if they went through with the project.
“Can [Gov.] Brownback put the red pencil to this?” he asked.
Bookout said he could not because the money is earmarked for the KDHE for this type of project.
The city is continuing to work toward getting a solution for net metering and the city attorney is continuing to work on the document to purchase the turbine.
“Sooner, rather than later, if you are interested in getting half of it paid for by someone else you are going to have to act on a deposit to tie up this turbin,” Llewellyn said.
“It’s about the money. It’s about getting the city as much as we can get them the cheapest way we know how.”
McKibban said he also had to look at how much was being spent now.
Commissioner David Chapin also wanted additional information on the payback and what the cost to the city would be each year.
“I doubt in my term I’m going to see real left over money,” he said, to which Llewellyn agreed.
The city is going to continue working on the agreements and more information will be provided to the commission this week.
