Willmar Municipal Utilities Commission approves in-house funding for two projects


— The

Willmar Municipal Utilities

Commission recently approved self-financing for two projects — the completion of the Northeast Water Treatment Plant and continued investment in the CapX2020 Brookings transmission line.

The approximately $17 million Northeast Water Treatment Plant project has been under construction for quite some time, with delays created by supply chain issues.

At a December 2023 meeting, the Municipal Utilities Commission approved a change order which extended the completion date of the project to spring of 2025. The project was originally planned to be completed by spring of 2024.

Willmar Municipal Utilities had planned to issue about $10 million in general obligation bonds to fund some of the project, but the delays have allowed time to accumulate sufficient cash flow to pay for the nearly $17 million project.

General Manager John Harren explained during discussion at the Jan. 8 commission meeting that supply chain issues have extended the completion of the project approximately one year, which gives Willmar Municipal Utilities an additional year of retained earnings to be able to fund the project in-house.

However, projections show a shortfall of approximately $300,000, which will be borrowed from the electric fund, according to Harren.

"The electric fund would have to help offset those costs until those dollars are made back up in our revenue on the water side," he said.

Commissioner Shawn Mueske explained that the reserves will dip below its 50% policy for one year, but it will be reclaimed fairly quickly according to the numbers presented to the planning committee, which made the recommendation to the Municipal Utilities Commission.

The CapX2020 Brookings line was an investment in transmission made by Willmar Municipal Utilities approximately 10 years ago along with 14 additional municipalities, according to Mueske.

The line was constructed for a double-circuit with only one circuit installed at the time, according to the Jan. 5, 2024, planning committee minutes. The plan currently is to add the second circuit; the Willmar Municipal Utilities share of the cost is approximately $550,000, which it can fund in-house.

Harren pointed out that despite the local recommendation to Central Minnesota Power Agency/Services to self-fund its share of the project, the organization may not be in the position to self-fund it.

The nonprofit Central Municipal Power Agency/Services provides energy management and consulting services for electric utility members and affiliates in Minnesota and Iowa.

"There's 15 different municipalities involved in this project, plus (Central Minnesota Power Agency/Services)," Harren said. "All 15 municipalities will have to have financial means to send their share ... and if they are not all able to do that," Central Municipal Power Agency/Services will be bonding for the funds instead.

Mueske noted that Willmar Municipal Utilities makes up 27% of the group funding the project, which is "by far the biggest investor in that." Some of the municipalities involved are very small and may not have the means to self-fund.

According to the its website, Central Municipal Power Agency/Services sponsored 11 public power utilities in Minnesota and four in Iowa in the CapX2020 transmission project 10 years ago in order to allow public power to make transmission investments on the same basis as investor-owned utilities.

Central Municipal Power Agency/Services and its participants own 3.9% of the 250-mile line along with Xcel Energy, Great River Energy, Ottertail Power Corporation and Missouri River Energy Services. The 345-kilovolt line goes from Brookings County, South Dakota, to Hampton, Minnesota.

During the 40-year life of the CapX2020 Brookings project, Central Municipal Power Agency/Services participants are projected to earn a return of $17.8 million in excess of their expenses in the form of distributions and savings from the $32 million investment to construct the line.