MPW moving closer to solar installation and further diversified power portfolio, presents 2023 operating budgets

Muscatine Power and Water
Muscatine Power and Waterhttps://www.mpw.org
Muscatine Power and Water (MP&W) is a customer-driven, not-for-profit municipal utility, established by the community for the purpose of serving the community responsively, competitively, and responsibly. MP&W provides reliable electricity, high quality water, and state-of-the-art communications services, including Internet, TV, and phone services, to businesses and homes throughout the Muscatine community at rates below state and national averages with outstanding customer service. MP&W is locally controlled and operated for the benefit and betterment of the community.

Muscatine Living

MUSCATINE, Iowa–Muscatine Power and Water (MPW) moved another step closer toward the inclusion of solar as part of the Utility’s proposed power portfolio transition. At Tuesday’s meeting of the Board of Water, Electric and Communication Trustees, the Trustees authorized Gage Huston, general manager, to enter into a Power Purchase Agreement for the Muscatine Solar 1 project.

Prior to authorization, the Trustee’s and MPW senior leadership went into closed session to review and discuss the confidential terms, conditions, and the associated financials of a possible Power Purchase Agreement.

Huston noted: “the addition of solar to MPW’s power portfolio aligns with our Strategic Plan to invest responsibly in renewable energy. It is important to note that we still need customer support to make this project come together. We are currently working with large customers to gauge their level of support for a new program allowing them to secure renewable energy commitments by covering the direct cost premiums associated with this project.”

Construction on the 24 MW solar installation is anticipated to begin 4Q 2024 with an operational target of 4Q 2025.

MPW senior leadership presented the Utility’s 2023 Operating Budgets and 10-Year Financial Projections (2023-2032). The Operating Budgets reflect ongoing efforts to keep expenses and capital expenditures at adequate levels to support MPW’s overarching goals around safety, customer service, reliability, affordability, flexibility, and sustainability.
The table below shows a high-level view of proposed 2023 budget numbers for each Utility and MPW in total.

2023 Operating Budget Summary ($M)

The 2023 Operating Budgets include these major projects:

Electric Utility

Powering the Future (PTF) – Unit 8A decommissioning and preliminary design/project scope of the combined heat and power (CHP) unit with a combined budgeted total of just over $1M.
• Generation – Large maintenance projects include replacement of a Unit 9 Turbine area sprinkler systems, a Unit 9 boiler chemical clean and roof repairs at Plant 1 and Unit 9. Combined total budget: $1.8M.
• Substation Improvements – Replace breakers and transformer protective relays at MPW’s Cedar and Isett substations and construct new storage building at MPW’s West substation: $0.8M.
• Overhead-to-Underground Conversions – Includes the purchase of an underground directional boring machine as well as undergrounding overhead electric infrastructure along Mulberry Ave. – 11th and Maple; Iowa and Sycamore – 8th to 11th St.: $0.8M.
• Customer Information/Billing System (CIS) – A project to implement a new CIS system, planned to be implemented in December 2022. The project, initially budgeted at $2.2M, was reduced 50% to $1.1M. Expenditures are covered in 2022 and 2023 with costs for this project allocated to all three utilities. 2023 budget: $0.4M.

Water Utility

• West Hill Sewer Separation Project (WHSS) – The 2023 budget includes $0.7M to continue with water infrastructure replacements in conjunction with the City’s sewer separation project.
• West Hill Pumping Station Project – Complete exterior building improvements at the existing pumping station facility near the West Hill Reservoir: $0.2M.

Communications Utility

• NOFA 6 & 7 – Construction and material costs for fiber expansion further into Muscatine County: $1.7M. These projects are partially funded by grants from the State of Iowa and Muscatine County.
• New Hybrid Bucket Truck: $214K.
• Cyber Security and Change-Management Projects: $219K.

The 10-Year Financial Projection was also provided to the Trustee’s for review. Each year, Utility staff compiles a comprehensive plan of major infrastructure projects and enhanced service offerings for Muscatine community residents in the coming years.

“Looking ahead several years gives the Utility, and ultimately our customers a vision for how MPW is investing in our community’s future for continued growth and prosperity,” said Huston. “Our goal is to have utility rates below State and national averages wherever possible, while providing a benefit to our customers of high service reliability delivered with outstanding local customer service.”

MPW continues to prepare for further electric vehicle (EV) adoption with the latest installation of a fourth public charging station. The charger is located at the Muscatine Mall between Walgreens and Bargain World of Muscatine.

The Utility has installed EV chargers throughout the community with funding from the Iowa DOT using Volkswagen settlement funds. Other locations include the Musser Public Library (408 East Second Street), The Merrill Hotel (119 West Mississippi Drive) and at MPW’s administrative offices (3205 Cedar Street).

EV owners across the country can find charger locations via many resources, including the EV Connect app, PlugShare app, or even Google Maps.

Guest to the meeting, Silvia Malaman, Bayer site manager, addressed the Board: “As a global company, Bayer has set sustainability initiatives to be carbon neutral by 2050, of which all the answers are not currently known. Bayer considers MPW to be more than an energy provider, but also as a partner of resource.” Malaman continued: “MPW team members have worked with Bayer on significant plant and product expansions, partnered with us in sustainability discussions and workshops. We are looking forward to MPW’s solar farm and look to partner with MPW and the community as all of us navigate the landscape of a more sustainable future.”

The Board reviewed the September 2022 financials for MPW and each of the three utilities. The Electric Utility again had a strong month. With wholesale electricity markets remaining above budgeted levels, net income for the month was $1.8M, $2.1M above budget. The Water and Communications Utilities also performed well, with the result that MPW net income of $2.3M was $2.4M above budget. Average wholesale prices for the month were 8.8¢ per kWh. MPW, as it has since June 1, also got significantly higher revenues from MISO for the generation capacity it provides to the MISO market. Those revenues have had a dramatic positive impact on MPW’s results.

Mark Roberts, director, finance and administrative services, said, “MPW’s goal though the high wholesale electricity prices in the May-September months was to balance market opportunity with the risk of not being able to have available generation when the electricity prices peaked.” Roberts continued, “MPW electric customers benefit from the strong margins while avoiding the exposure to MPW needing to buy electric energy from the market at extremely high prices.”

In other business, the Board:

• Approved a PSF for Unit 9 Exciter Control Update Project.
• Set Tuesday, February 28, 2023, at 5:28 p.m. for a public hearing to receive written and oral comments on the Public Utility Regulatory Policies Act provisions (20) Promotion of Demand-Response & Demand-Flexibility, and (21) Promotion of Greater Electrification of the Transportation Sector standards.
• Entered a closed session in accordance with Iowa Code 21.5(1)(k) and 388.9 for the purpose of discussing a Power Purchase Agreement for the Muscatine Solar 1 project and the associated Renewable Energy Retail Adder for the Choose Green Business Program.
• Set Tuesday, November 29 at 5:28 p.m. for a public hearing to receive comments on MPW’s 2023 budgets.

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