DEPARTMENT: Environmental Resources
FILE TYPE: Consent Action
TITLE
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Authorization To Amend 2023 Byllesby Dam Capital Improvement Program And Non-Department Budgets To Utilize American Rescue Plan State And Local Fiscal Recovery Funds For Byllesby Dam Water-To-Wire Redevelopment Project And Authorization To Execute Facilities Services Agreement And Payments To Northern States Power Company, Inc.
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RESOLUTION
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WHEREAS, Dakota County owns the Byllesby Dam and operates its high-hazard hydroelectric facility under the Federal Energy Regulatory Commission (FERC) safety regulation; and
WHEREAS, by Resolution No. 15-532 (October 20, 2015), the Dakota County Board of Commissioners authorized the execution of a contract with Ayres Associates, Inc. for engineering design services to complete turbine and powerhouse upgrades for the Byllesby Dam Water-to-Wire Redevelopment Project; and
WHEREAS, by Resolution No. 18-538 (October 23, 2018), the County Board authorized a contract with the Boldt Company, LLC, for construction manager/general contractor services for Phase II of the Project; and
WHEREAS, by Resolution No. 22-286 (July 19, 2022), the County Board authorized the first amendment to the Boldt Company contract due to significant dam safety and structural deficiencies identified during the removal of the over-century-old facility; and
WHEREAS, since the execution of the change order in July 2022, the FERC project engineers and construction contractor have continued to identify and correct similar safety and structural deficiencies with the dam at added expense; and
WHEREAS, the total cost of the additional work since the first change order plus work forecasted to finish the project is approximately $2,800,000; and
WHEREAS, by Resolution No. 20-295 (June 16, 2020), the County Board authorized the submittal of an application to the Midcontinent Independent System Operator (MISO) to enable the County to sell Byllesby Dam’s power to multiple utilities across the Midwest to increase power sales revenues and reduce the project’s payback period; and
WHEREAS, the MISO process identified necessary changes to the Byllesby Dam project’s electrical equipment, the adjacent Northern States Power Company (NSP) substation equipment, and long-term costs for electrical grid upgrades to accommodate the project; and
WHEREAS, the total cost of these upgrades is $2,881,000; and
WHEREAS, by Resolution No. 23-372 (August 29, 2023), the County Board authorized the Generator Interconnection Agreement (GIA) with MISO and NSP; and
WHEREAS, the agreement requires a financial guarantee for the cost of the upgrades plus an initial cash payment of $1,325,000; and
WHEREAS, the County has previously entered into an agreement with NSP and paid $150,000 to initiate engineering and procurement of long-lead time materials and made a deposit to MISO totaling $115,000; and
WHEREAS, under the terms of the GIA, the remaining initial cash payment in the amount of $1,060,000 is due January 4, 2024; and
WHEREAS, a Facilities Services Agreement with NSP that provides for longer-term payment utilizing hydropower revenue of $1,556,000 for grid upgrades to accommodate the project is required; and
WHEREAS, based on review of American Rescue Plan (ARP) State and Local Fiscal Recovery Funds (SLFRF) eligibility requirements for clean water projects, the Byllesby Dam Water-to-Wire
Redevelopment Project is an eligible expense; and
WHEREAS, under Treasury reporting guidance for Final Rule, 31 CFR Part 35, Subp. A, Section 35.6 (e) (1), definitions for the Clean Water: Energy Conservation include costs associated with the
production of renewable energy; and
WHEREAS, staff recommends authorization to use $5,580,936 of ARP SLFRF funds to finance construction and necessary improvements to the adjacent substation.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby amend the 2023 Byllesby Dam Capital Improvement Program Budget as follows:
Revenue
American Rescue Plan State and Local Fiscal Recovery Funds $5,580,936
Total Revenue $5,580,936
Expense
Byllesby Dam Upgrade BD00008 $5,580,936
Total Expense $5,580,936
; and
BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners hereby amends the
2022 Non-Departmental Budget as follows:
Revenue
American Rescue Plan State and Local Fiscal Recovery Funds ($5,580,936)
Total Revenue ($5,580,936)
Expense
Program Expense ($5,580,936)
Total Expense ($5,580,936)
; and
BE IT FURTHER RESOLVED, That the Dakota County Board of Commissioners hereby authorizes payment to Northern States Power Company, Inc. in the amount of $2,881,000 of which $1,060,000 will be paid by January 4, 2024 and authorize a Facilities Services Agreement with Northern States Power, Inc. which provides for a longer term payback of the remaining amount subject to the County Attorney’s Office as to form.
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