DEPARTMENT: Environmental Resources
FILE TYPE: Consent Action
TITLE
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Authorization To Execute Contract With Xcel Energy For Engineering And Procurement Agreement For Byllesby Dam Energy Sales Interconnection
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PURPOSE/ACTION REQUESTED
Authorize to execute a contract with Xcel Energy for engineering and procurement prior to completion of Midcontinent Independent System Operator (MISO) power sales application to start the process for interconnection to Xcel Energy substation.
SUMMARY
Dakota County owns the Byllesby Dam and operates the hydroelectric facility under Federal Energy Regulatory Commission (FERC) safety regulations. Since 1987, the County has coordinated dam operations and maintenance with Neshkoro Power Associates (NPA) through a lease agreement. The County Board authorized replacing the NPA’s lease agreement with an operating agreement to provide hydropower operation services at Byllesby Dam by Resolution No. 11-305 (June 21, 2011), beginning May 1, 2011, and running through March 2021. The March 2021 agreement termination date was selected as it was also the expiration date of the Power Purchase Agreement (PPA) between NPA and Xcel Energy for the Byllesby Dam. A new approach was needed for an agreement for power sales. By Resolution No. 20-295 (June 16, 2020), Dakota County authorized submittal of an application with the MISO for sale of energy. A MISO connection would allow the County to sell Byllesby Dam’s power to other utilities in the Midwest or on the one-day-ahead spot energy market.
As part of the process, MISO studies determined upgrades are necessary to the system to accept Byllesby onto the grid. These upgrades are not allowed to begin before the completion of the MISO application process, which is still not completed. It has been determined that interconnection to the Xcel Energy substation could take 18 months or more. To expedite this process, an engineering and procurement agreement can be accepted between Dakota County and Xcel Energy for Xcel Energy to start the engineering and purchasing process and further delay interconnection after the MISO application process is complete. The agreement requires a $150,000 deposit to cover estimated engineering and procurement costs, with Xcel Energy reserving the right to request increased deposits to cover costs as necessary. Once the MISO application is approved, this agreement will be replaced with a Generator Interconnection Agreement that will provide for, among other things, the interconnection of the County’s facility to the Cannon Falls Transmission Substation.
RECOMMENDATION
recommendation
Staff recommends to execute a contract with Xcel Energy for engineering and procurement agreement for Byllesby Dam energy sales interconnection.
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EXPLANATION OF FISCAL/FTE IMPACTS
Sufficient funds are available in the Byllesby Dam fund balance to cover the fees associated with this agreement.
☒ None ☐ Current budget ☐ Other
☐ Amendment Requested ☐ New FTE(s) requested
RESOLUTION
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WHEREAS, Dakota County owns the Byllesby Dam and operates the hydroelectric facility under Federal Energy Regulatory Commission (FERC) safety regulations; and
WHEREAS, since 1987, the County has coordinated dam operations and maintenance with Neshkoro Power Associates (NPA) through a lease agreement; and
WHEREAS, the County Board authorized replacing the NPA’s lease agreement with an operating agreement to provide hydropower operation services at Byllesby Dam by Resolution No. 11-305 (June 21, 2011), beginning May 1, 2011, and running through March 2021; and
WHEREAS, the March 2021 agreement termination date was selected as it was also the expiration date of the Power Purchase Agreement (PPA) between NPA and Xcel Energy for the Byllesby Dam, and a new approach was needed for an agreement for power sales; and
WHEREAS, by Resolution No. 20-295 (June 16, 2020), Dakota County authorized submittal of an application with the MISO for sales of energy; and
WHEREAS, a Midcontinent Independent System Operator (MISO) connection would allow the County to sell Byllesby Dam’s power to other utilities in the Midwest or on the one-day-ahead spot energy market; and
WHEREAS, as part of the process, MISO studies determined upgrades are necessary to the system to accept Byllesby onto the grid; and
WHEREAS, these upgrades are not allowed to begin before the completion of the MISO application process, which is still not completed; and
WHEREAS, it has been determined that interconnection to the Xcel Energy substation could take 18 months or more; and
WHEREAS, to expedite this process, an engineering and procurement agreement can be accepted between Dakota County and Xcel Energy for Xcel Energy to start the engineering and purchasing process and further delay interconnection after the MISO application process is complete; and
WHEREAS, the agreement requires a $150,000 deposit to cover estimated engineering and procurement costs, with Xcel Energy reserving the right to request increased deposits to cover costs as necessary; and
WHEREAS, once the MISO application is approved, this agreement will be replaced with a Generator Interconnection Agreement that will provide for, among other things, the interconnection of the County’s facility to the Cannon Falls Transmission Substation.
NOW, THEREFORE, BE IT RESOLVED, That the Dakota County Board of Commissioners hereby authorizes the Environmental Resources Director to execute a contract with Xcel Energy for an engineering and procurement agreement for Byllesby Dam energy sales interconnection, including a minimum $150,000 deposit, subject to approval by the County Attorney’s Office as to form.
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PREVIOUS BOARD ACTION
11-305; 6/21/11
20-295; 6/16/20
ATTACHMENTS
Attachment: Engineering and Procurement Agreement
BOARD GOALS
☒ A Great Place to Live ☐ A Healthy Environment
☐ A Successful Place for Business and Jobs ☐ Excellence in Public Service
PUBLIC ENGAGEMENT LEVEL
☐ Inform and Listen ☐ Discuss ☐ Involve ☒ N/A
CONTACT
Department Head: Nikki Stewart
Author: Josh Petersen