Co-op board members debate moving ahead on buying LM6000 while further analyzing alternatives, risks
Golden Valley Electric Association’s board of directors voted Tuesday to chug along with a proposal to buy a 60-megawatt generator for an estimated $80 million. The naphtha-fueled turbine generator is meant to ensure GVEA will have enough electricity to accommodate increasing demand.
Golden Valley’s board and management team agree that the co-op must generate more electricity if it’s to keep up with growing membership, which includes large industrial customers like gold mines and military installations.
“The backdrop of this is we're coming off an incredibly cold winter,” says Board Chair Dave Messier, “and Golden Valley staff, rightfully so, has been very concerned about our ability to accomplish our mission, which is to provide power to our members.”
Messier says that’s why GVEA directors, management and staff have for months been studying a proposal to buy a used 60-megawatt generator called an LM6000. In Tuesday’s meeting in Delta Junction, the board voted to approve a motion by Director Rick Solie to move ahead on a possible purchase of the generator.
If the board ultimately votes to buy the generator, it would be installed next to an older LM6000 in Golden Valley’s North Pole Expansion plant.
The directors also agreed Tuesday to further study risks and alternatives to the generator purchase.
“There is a necessity to move forward, and I know that is the predominant thought that staff feels,” Messier said in an interview Wednesday. “That they want a secure generation as quickly as possible so that we are not in a position where we can't supply reliable electricity to our members.”
The LM6000’s generator is powered by a turbine that some compare to a jet engine. It’s fueled by naphtha, a liquid petroleum-based product.
Golden Valley staff estimate the newer LM6000 would at least cost $80 million to buy, rebuild, transport and install. They estimate the acquisition would decrease the average residential member’s monthly bill by nearly $11 over the 30-year repayment period.
A GVEA spokesperson says that’s because the LM6000 would run on naphtha, which is less expensive than diesel and has more stable pricing.
The spokesperson said the additional LM6000 would enable Golden Valley to discontinue relying on its diesel-fired North Pole Power Plant to supplement the co-op’s baseload. Instead, it would return the plant to reserve status, for use only as back-up. The resulting fuel savings are expected to more than offset the cost of the new unit, they said.
Messier says he agrees the generator would boost Golden Valley’s capacity. But he and board members Gary Newman and Phil Wight said they believe the board should first conduct more studies and further consider the purchase in next month’s meeting.
“That is a very large strategic generation purchase for a utility,” he said, “and we want to make sure that we have turned over every stone and evaluated every alternative that might bring reliable energy to the Interior at a lower cost.”
Golden Valley policy requires the chairperson to speak for the board. So Messier said he and Newman and Wight all want more time to further study the potential risks of the purchase and consider other additional sources of energy, including wind farms.
But, he added, “There are other board members who feel that we have gotten to a point where there's no need to delay, and we should move forward and authorize the purchase of an LM6000.
Those include Rick Solie, Brad Swope and Krista Zappone.
Solie's motion, Messier said, "was not to authorize the purchase, but it certainly set us really clearly on that trajectory.”
The two opposing groups of directors debated the issue for two hours Tuesday before board member John Sloan joined Solie, Swope and Zappone, who favored advancing the generator proposal. They prevailed on a 4-to-3 vote.
Golden Valley CEO Travis Million said Wednesday that the board’s vote enables the staff and management team to look more closely at two used LM6000s that utilities on the East Coast are offering to sell. But that doesn’t necessarily mean it’s a done deal.
“And that was one of the things I tried to highlight to the board last night,” he said, “is that if for some reason this unit falls through and we can't get it, or the price goes through the roof and it's not within the price range the board gave us authority for, then yeah, we'd be back to the board going, ‘Okay, we need to look at something else.’ "
Correction: This story has been revised to correct an error in the earlier version that incorrectly stated buying the LM6000 would raise members' monthly bills by about $11. GVEA staff say the purchase would actually reduce members' bills by $11 per month.
