HomeMy WebLinkAboutVIII-12 Approve Surrender of FERC License at the Hydro-Electric PlantCity Council Memorandum
To: Mayor Fasbender & City Council Members
From:Ryan Stempski –Public Works Director
Date:May 19, 2025
Item:Approve Surrender of FERC License at the Hydro-Electric Plant
Council Action Requested:
The Council is requested to approve the surrender of FERC license at the Hydro-Electric Plant and
propose transfer of the facility to USACE.
Background Information:
The 4.4 MW Hydro-Electric Plant was constructed in 1985 and is now an aging facility. Repairs are
becoming more numerous and expensive. Revenue has been declining over the past couple of decades
and not able to keep up with the maintenance needs.
Current staff were not around for the decisions to install the Hydro Plant in 1985. This was done at
different times under different circumstances than today. Rather we have investigated the current and
future needs of the facility to determine how to move forward in the best interest of the city.The plant
cannot implement improvements to produce more power. The river conditions and structure at Lock
and Dam No. 2 are the restricting factors to the ability to produce power.The Hydro plant has some
challenging aspects that restrict its productivity and increase its costs to maintain it:
•Navigation is primary to the lock and dam which takes away from the ability for the Hydro Plant
to make power. The USACE controls the river head and flow to meet navigational requirements
first. If we are ordered to throttle down for navigational purposes,power production suffers.
•Accessibility is extremely challenging being in the middle of the Mississippi River. All equipment
and materials to service the facility must come in by a narrow cart or barge.
•Tight tolerances in the plant are not ideal for river water sediment and debris. Causing issues
and breakdowns.
•The style of turbine/generators is very complex to operate and maintain as it needs to
accommodate variable head and flow conditions.
•Power rates are set by Xcel of the avoided costs of a power plant and capability payment is
based on seasonal performance. These are conditions out of the city’s control that impact
revenue.
The Hydro plant has high annual cost to keep basic operations going:
•Dewatering is required every 5 years for inspections.
•Insurance is limited to one provider.
•Rent is owed to USACE for use of the lock and dam as the underlying structure. The city pays
power costs of the lock and dam as the form of rent.
•License, fees, and routine repairs.
•Dedications of a 0.5 FTE in staffing.
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The private sector has not shown interest obtaining the facility from the city,but the USACE appears to
be a promising owner of this facility in the future:
•USACE could use hydro power to offset power costs in the district.
•USACE is self-insured and would not have the same federal regulations as the city.
•USACE has expertise across the country, is in the business of hydro power, and owns the site
that the Hydro plant sits on.
Staff presented the facts of the situation to the Utilities Committee on February 27, 2023, October 10,
2023, and January 27, 2025, and met with City Council at the May 5th Workshop. There was support
from the Committee and Council to move the process forward to promote action and response from the
USACE.The City Attorney reviewed the FERC license and the agreement with Xcel Energy for power
generation, and stated that both have the ability to transfer without penalty.
Financial Impact:
Estimating the anticipated revenue and cost to run the Hydro Plant (including the major maintenance
plan required) over the next 25 years results in a loss of over $10 Million.
Staff Recommendation:
Staff recommends the City Council authorize the surrender of the FERC license and propose transfer of
the facility to USACE.
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