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City signs reserve power agreement with MRES

By
Lori Sorenson

The Luverne City Council approved a $6.36 million reserve capacity agreement with Missouri River Energy Services for the 3,500 KW diesel-powered generator in the power plant building.
The 1967 generator has been in the power plant and under an reserve capacity agreement for many years, and according to City Administrator John Call, the agreement is mutually beneficial for both MRES and Luverne.
“The contract basically states that the city will own and maintain the generator and keep it available for MRES to purchase electrical load off of it during peak events like the polar vortex of last February,” Call told the council at the April 27 meeting.
MRES pays the city $6,720 per month to own, operate and maintain the generator. Also, the city can use the generator for city emergency use when necessary.
“This contract makes sense to both the city and MRES as both entities have good reasons to have ‘power on demand’ in case of extenuating circumstances,” Call said.
The new term of the reserve capacity agreement will extend to 2052 and recognizes the fact that the generation will be operating under the Southwest Power Pool transmission organization.
Once two new generators (3,100 KW each) are operational next year, they will be added to the agreement.
MRES will pay the city $2.85 per KW or $17,670 per month for 30 years or $6,361,200.

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