The city wants to buy a 40-megawatt natural gas fired combustion turbine for $22 million.
The city already owns about 23 percent of WyGen III, which it bought in August 2010 for $63 million through a bond. It will be paying that bond back for the next 30 years in about $4 million increments.
WyGen III supplies the city’s base power of 23 megawatts but the city gets its supplemental power from the Municipal Energy Agency of Nebraska, which is a consortium that buys power from different providers and sells it.
That partnership is up for renewal in March 2014, leading the city to look at alternate options. Conveniently, Black Hills Power will be selling a 10-year-old, 40-megawatt natural gas fired combustion turbine generator in 2014.
If it buys the combustion turbine generator, the city would fund it through a sale of bonds.
The city won’t disclose the location of the combustion turbine, but city spokesman Joe Lunne confirmed that it was local.
“Staff believes the savings experienced through ownership of (WyGen III) could be experienced with ownership of a CT (combustion turbine),” according to information released Friday afternoon by the city of Gillette.
“In addition to financial benefits, staff believes the rate payers would be less susceptible to frequent rate hikes,” the release added.
The purchase would diversify Gillette’s energy and its purchasing power on the energy market. While it would be a natural gas fired generator, it doesn’t discount the city’s commitment to coal.
“I think we have bought into WyGen III for coal, and I think the city is completely for keeping coal strong,” Lunne said.
The city anticipates that this purchase will supply most, if not all, of Gillette’s supplemental energy, giving it access to roughly 63 megawatts.
In an interview last week, City Administrator Carter Napier indicated that in its peak demand during the summer, the city can use as much as 70 megawatts.
“On the typical base load and the supplemental, it looks like it will be able to handle what we need it to handle,” Lunne said.
City officials will present the full details of the proposed purchase at a special public meeting scheduled 6 p.m. Monday in City Hall’s second floor community room.
After receiving public comments Monday, the City Council will vote at its Sept. 4 meeting on whether to consider buying the combustion turbine.
For more details, see Sunday’s News Record.