HomeMy WebLinkAbout6b. Generator Upgrades4ROSEMOUNTEXECUTIVE SUMMARY
CITY COUNCIL
Utility Commission Meeting: April 8, 2013
ISSUE
As discussed at the March 11 Utility Commission meeting, City staff has been researching the impacts
of the new EPA rule for Reciprocating Internal Combustion Engines National Emission Standards for
Hazardous Air Pollutants (RICE NESHAP). The RICE NESHAP rule requires implementation of
new maintenance and reporting practices for certain non - emergency stationary engines. Many of these
engines will also require retrofit with catalytic emission control.
The city operates three generators that currently fall under the regulation of this new rule and may need
to be upgraded in the near future. Staff has researched this issue and developed two options for Utility
Commission consideration.'
BACKGROUND
Option 1
Wells 7, 9 and 12 are currently enrolled in the Xcel Energy Electric Rate Savings (ERS) peak demand
program. Stationary generators at Wells 9 and 12 and a portable generator at Well 7 are used to
facilitate participation in this program. By participating in the ERS program and switching to standby
power during periods of peak electrical demand, we receive substantially lower usage rates from Xcel
Energy, providing a savings of approximately $13,720 annually.
To continue in the ERS program, components on these three generators would need to be upgraded to
be NESHAP compliant by May 2014. The estimated cost of these upgrades is provided in Table 1.
GAUTILITY COMMISSIOMUC Information \20130408 UC Generator Upgrades.dou
AGENDA SECTION:
AGENDA ITEM: Generator Upgrades
Old Business
PREPARED BY: Andrew J. Brotzler, PE, Director of
Public Works / City Engineer
AGENDA NO.
ATTACHMENTS: None
APPROVED BY:
RECOMMENDED ACTION: Motion to Authorize the Expenditure of Funds from the
Water Utility Fund to Complete Generator Upgrades
—or—
Motion to Authorize Withdrawal from the Xcel Energy Electric Rate Savings program
ISSUE
As discussed at the March 11 Utility Commission meeting, City staff has been researching the impacts
of the new EPA rule for Reciprocating Internal Combustion Engines National Emission Standards for
Hazardous Air Pollutants (RICE NESHAP). The RICE NESHAP rule requires implementation of
new maintenance and reporting practices for certain non - emergency stationary engines. Many of these
engines will also require retrofit with catalytic emission control.
The city operates three generators that currently fall under the regulation of this new rule and may need
to be upgraded in the near future. Staff has researched this issue and developed two options for Utility
Commission consideration.'
BACKGROUND
Option 1
Wells 7, 9 and 12 are currently enrolled in the Xcel Energy Electric Rate Savings (ERS) peak demand
program. Stationary generators at Wells 9 and 12 and a portable generator at Well 7 are used to
facilitate participation in this program. By participating in the ERS program and switching to standby
power during periods of peak electrical demand, we receive substantially lower usage rates from Xcel
Energy, providing a savings of approximately $13,720 annually.
To continue in the ERS program, components on these three generators would need to be upgraded to
be NESHAP compliant by May 2014. The estimated cost of these upgrades is provided in Table 1.
GAUTILITY COMMISSIOMUC Information \20130408 UC Generator Upgrades.dou
Table 1
Description
Asset
Estimated Cost
Well 7 - portable
8059
$30,000
Well 9 - stationary
0053
$45,000
Well 12 - stationary
0060
$45,000
Total Estimated Cost
$120,000
In addition to the upgrade costs, there would be an additional cost of approximately $15,000 every
three years to have the equipment inspected to ensure it remains NESHAP compliant. There would
also be ongoing costs for continuous temperature monitoring, monthly pressure drop monitoring,
submitting semiannual reports, and the administrative cost associated with coordinating this extra
monitoring.
Over the next 10 years, the cost to maintain NESHAP compliance and remain on the Xcel Energy ERS
program is estimated to be $165,000 to $185,000.
Option 2
Xcel Energy allows agencies to withdraw from the ERS program with a six -month written cancellation
notice. By withdrawing from this program, the city would pay nearly $14,000 in increased electricity
charges annually, but would not be subject to the NESHAP regulations since the generators would then
be considered strictly emergency engines.
In addition to the increased electricity rates, the city may incur a cancellation penalty from Xcel Energy
if any of the three generators exceeds 50 hours of use before our termination date (six months after
notice). Based on historical usage, it is unlikely that any of the generators would exceed this 50 hour
threshold. In the unlikely event we exceed the 50 hour threshold, the possible penalty charges are
outlined in Table 2:
Table 2
Description
Estimated Penalty
Well 7
$4,000
Well 9
$4,000
Well 12
$5,600
Total Possible Penalty
$13,600
Over the next 10 years, the cost to withdraw from the Xcel Energy ERS program is estimated to be
$140,000 in increased electricity charges. No equipment upgrades would be necessary if we withdraw
from the ERS program.
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Other Generators
The city operates several other stationary generators that are not impacted by the RICE NESHAP rule
at this time because they are considered strictly emergency engines. A summary of these units is
provided in Table 3:
Table
3
Description
Asset
Reason
Public Works
0052
Natural Gas
Qty Hall
0054
Natural Gas
Fire Station 1
0058
Natural Gas
Fire Station 2
0061
Natural Gas
Well 14
0062
Meets Standards
Mechanics Shop
0063
Meets Standards
SUMMARY
Staff is requesting Commission authorization to pursue one of the following options:
• Utilize Water Utility funds to pay for necessary generator upgrades and remain on the Xcel
Energy ERS program
• Withdraw from the Xcel Energy ERS program and maintain the generators as they are
`Information gathered from the following resources:
• Environmental Protection Agency Laws & Regulations (www.epa.gov /lawsregs)
• Environmental Protection Agency RICE NESHAP fact page
(w=.epa.gov/ttn/ atw/ rice/ rice pg. ht ml)
• Reza Bagherian (EPA Region 5 NESHAP specialist)
• Paul Kaeding (Barr Engineering)
• Steve Willaert (Xcel Energy)
• Joseph Hanley (Collins Electrical)
• Mark Reuter (Ziegler Power Systems)
• Joshua Quilling (Cummins NPower)
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