Elk River looks at increasing ownership in transmission line
by Joni Astrup
Elk River Municipal Utilities (ERMU) is exploring the possibility of increasing its ownership in an electrical transmission line proposed to run from South Dakota to southeast of the Twin Cities.
ERMU sees it as a potential opportunity to hold down future electrical rates.
ERMU entered into an agreement four years ago to participate in the CAPX2020 Brookings-Twin Cities Transmission Project. The agreement calls for ERMU to invest $2,246,896 in the project.
Now ERMU and the Elk River City Council are weighing whether or not to increase that amount to as much as $7,140,953.
The utilities commission and the city council met in a joint work session Monday, March 7 to discuss the matter. The city council must make a decision on Monday, March 14.
Larry Blaine, chief financial officer of Central Minnesota Municipal Power Agency (CMMPA), discussed the project with the two bodies during the meeting.
The transmission line would run for 250 miles from Brookings, S.D., to Hampton, Minn., which is just southeast of the Twin Cities. Projected cost of the line is $827 million.
Xcel Energy is the biggest player in the project, at 72 percent. Other participants include Great River Energy, Missouri River Energy Services, CMMPA and Otter Tail Power Company.
ERMU is participating through CMMPA.
Buying into the line is one way ERMU hopes to hold down future rates for its electric customers.
Very little transmission has been built in the last 30 years and a large-scale expansion in transmission infrastructure is needed, according to CMMPA. Transmission rates are projected to increase by over 100 percent in the next 10 years, according to CMMPA.
By owning part of the Brookings to Twin Cities transmission line, ERMU would receive a portion of the transmission tariff paid by electrical customers. The tariff amount is projected to exceed the amount ERMU would need to pay off the bonds issued by CMMPA to finance ERMU’s portion of the transmission line project.