Voters will decide
fate of power line By David Lias
Plain Talk Vermillion citizens who hope to short-circuit the Vermillion City Councilâ�?�?s plans to erect new power lines from the city to the Spirit Mound Substation in rural Clay County have referred the project to a public vote. City planners, however, hope that residents of the community will realize that when they go to the polls during a special election scheduled Jan. 20, 2009, a vote in favor of the new transmission line will bring will help keep the costs of Vermillionâ�?�?s ever-growing demand for electricity under control. The city plans to construct approximately 20 total miles of a looped 115 kV power line from the Spirit Mound substation to the existing substation at the Municipal Service Center located at W. Duke Street. The lines will be erected approximately 60 feet above the ground on wooden power poles. The poles will be placed in the right-of-ways of county roads and Highway 19. Placing the poles along county roads created controversy last summer. Citizens residing near the proposed linesâ�?�? route listed a number of concerns â�?�? from traffic safety and the possible negative affect the lines could have on oneâ�?�?s health, to the detrimental affect the lines would have on scenery and windbreaks in cases where trees would have to be trimmed. The negative feedback received at a Clay County Commission hearing compelled its members to refuse granting the use of the county road right-of-ways for the transmission line. That lead to a day-long face-off between the city and the county in a civil hearing brought heard by Circuit Judge Steven Jensen. Jensen eventually decided that Vermillion should be allowed to place the power lines in the right-of-ways of Clay County roads. The center of the poles, he ordered, would be placed two feet from the public highway right-of-way so that they donâ�?�?t enter adjacent real property. The judgeâ�?�?s decision included other factors designed to alleviate, as much as possible, any hardship on private property owners. He ordered that power poles be placed in such a way to avoid or reduce tree trimming in shelter belts as much as possible. The city also must place the power line poles from 230 feet to 300 feet apart, Jensen ordered, to minimize their view from residence dwelling structures. The judgeâ�?�?s stipulations arenâ�?�?t enough, however, to stop opposition to this project. Petitions were circulated in the city, and enough signatures were collected to put this issue to a public vote. Cost factors It will cost approximately $8 million, according to city estimates, to build the new power lines. The city will pay for this project by using $2 million of Light & Power reserves, and the balance of the project will be bonded and repaid over 25 years. Rather than being a a drain on the city coffers, however, the new lines could actually be a significant revenue source, according to City Manager John Prescott. In May 2008, MRES (Missouri River Energy Services) announced a new program which would benefit the Vermillion transmission line project, he said. If member transmission facilities representing at least 300 MW are leased to MRES, they will make annual lease payments to Vermillion equal to 14 percent of the cityâ�?�?s infrastructure investment, and approximately $7 million of the cityâ�?�?s investment would qualify. â�?�?Missouri River Energy Services announced a program in May where they would lease member-owned transmission infrastructure, and they would make an annual lease payment equal to 14 percent of $7 million of our Vermillion infrastructure,â�? he said. â�?�?The city would technically make a payment to use the city transmission line that is being leased to Missouri River Energy Services, but Missouri River Energy Servicesâ�?�? payment to Vermillion would exceed our debt service as well as our charge to use the line.â�? This scenario, Prescott said, turns electric transmission from a current cost scenario into a revenue-generating item for our light and power system. �? â�?�?If the Missouri River Energy Services system doesnâ�?�?t happen â�?�? if they donâ�?�?t get enough members to come into play on that, this project still has a positive return to the city of less than 15 years,â�? he said. â�?�?If we do this without Missouri River Energy Services, thereâ�?�?s a $30 million savings over 40 years.â�? The benefit to MRES is in having transmission facilities under their control when they need to purchase power. The more transmission facilities under their control, the more control they have in the marketplace. For the Vermillion transmission project, the impact would be huge. The city had been studying a transmission line option for several years, Prescott said, and the numbers made sense financially before this income stream was a possibility. Vermillion currently has a WAPA (Western Area Power Administration) allocation from the Missouri River dam system. The WAPA allotment is fixed and currently meets about 65 percent of the cityâ�?�?s electrical needs. The balance of the electricity used by Vermillion Light & Power customers is purchased from MRES. MRES owns wind, coal and natural gas powered electrical generating facilities. The city pays costs associated with generating both WAPA and MRES power. A transmission system is needed to get the power to the cityâ�?�?s substation for distribution to electrical customers. Currently, East River Power Cooperative is wheeling power to the Municipal Service Center substation. The term wheeling is used for costs associated with transporting power from the source to the cityâ�?�?s substation. Wheeling charges do not cover the cost of generating or purchasing electricity for use by Vermillion Light & Power customers. The city made a $1.4 million payment for East River system improvements in 1981. In exchange for this payment, the city currently only makes an annual operating and maintenance payment of $56,000 to East River for wheeling. The agreement expires on Dec. 31, 2010. The city negotiated with East River in 2006 to continue the wheeling arrangement. East River proposed to move away from an operations and maintenance payment to the billing system that all other non-member entities experience. In this situation, wheeling charges are determined on a per kilowatt basis. The final proposal submitted by East River included a $2.00 per kilowatt charge for wheeling services. In 2007, the city utilized 145,840 kilowatts per year. In 1997, the city utilized 112,657 kilowatts per year. In 2017, the city anticipates using 159,800 kilowatts per year. As electrical usage increases, so does the amount to be paid to East River with the proposed wheeling arrangement. The $2.00 per kW charge would only have been guaranteed until 2017. The East River per kW wheeling charge is revised every five years. In addition to the per kilowatt charge, the city would also be responsible for a 7 percent line loss payment, according to Prescott. If Vermillion were to use 150,000 kW of electricity in a year, the city would be responsible for the generating cost of 160,500 kW of electricity and paying the $2.00 wheeling charge on 160,500 kWs of electricity. The City currently receives power via an East River owned 69 kV transmission line. With a 69kV transmission line, the actual line losses are approximately 3 percent. The balance of the power purchased and added to the electrical grid by the Vermillion through the 7 percent line loss payment is available for East River distribution customers to use. In recognition of Vermillionâ�?�?s 1981 facility payment, East River would provide an annual $93,000 credit on the wheeling bill through 2031. This would be the final credit given for the 1981 payment. After 2031, the city would not receive any credit for the 1981 system investment and wheeling costs would be solely on a per kW basis. As the exact electrical consumption in 2011 is unknown, the estimated wheeling cost in 2011 including additional line losses was estimated to be $304,000 if Vermillion would have stayed with East River Power Cooperative vs. the current $56,000 annual payment. In 2021, the estimated wheeling cost is estimated to be $518,000.
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