School decision sparks debate
Despite the fact that the New Richmond School Board has voted unanimously to allow St. Croix Electric Co-op (SCEC) to provide electricity to the new high school, the issue continues to smolder.
Not satisfied with the Board's decision, New Richmond Utilities (NRU) has taken the matter to the Wisconsin Public Service Commission for a determination as to which company has the "right" to provide power to the high school.
A letter from Ken Cernohous, president of the New Richmond Utilities Commission, to School District Superintendent Morrie Veilleux, dated June 10, urged the School Board to reconsider their decision.
In the letter, NRU "upholds that SCEC's proposal infringes on their service territory and will significantly limit their (NRU's) growth potential for future utility development on the south end of the city."
The letter also breaks down the two proposals in detail and concludes that NRU is the most cost-effective choice for the School District.
In an apples-to-apples comparison, Cernohaus claims, SCEC offered the School District a rate of 8.7 cents per per kilowatt-hour and NRU offered 7.9 cents per kilowatt-hour. That documentation of Prein's hours comparison shows NRU to be 10 percent less than SCEC.
At the center of the debate is SCEC's alternative proposal, which lowers their estimated electric service costs substantially to 6.2 cents per kilowatt-hour if they agree it be taken off the grid during peak electrical use.
But this plan requires the School District to purchase, operate and maintain a diesel emergency generator capable of powering the entire high school.
The diesel generator would be necessary if SCEC were to take the high school off their main grid during peak usage times. NRU contends that if SCEC takes the school off the grid and requires them to use the back-up generator, while it saves the school money on electricity, it costs them in other ways, such as diesel fuel and maintenance.
Since the School District already has some generator capacity, they would be looking at an investment of approximately $200,000-$230,000 for an additional generator, according to Veilleux.
The Board, after taking all factors into consideration, voted for the alternative plan offered by SCEC.
"At the School Board meeting I attended," Cernohous said, "someone said there ia a 13 - 14 year return on the investment for paying for the generator (at an approximate cost of $500,000). I have never seen a 13-year return on such an investment. You can put that money in the bank and double it. The generators are not a good return on an investment."
Veilleux claims the payback is closer to seven years. After the generator is paid for, Veilleux claims the District would save $40,000-$45,000 a year in electrical costs under the SCEC plan.
NRU officials claim their proposal will save the district about $20,000 a year.
NRU is a one of 48 communities that belongs to Wisconsin Public Power Inc. (WPPI). Cernohous said WPPI is large enough to buy power and get good rates and also produce power.
"WPPI has several generating facilities and is becoming a part of a big wind farm in the near future," Cernohous said.
SCEC President Mark Pendergast pointed out that SCEC has had electric service on the parcel of property the School District bought since 1977.
"We have an underground line within no more than 200 feet of the new high school. We have no investments required of facilities off the property to serve the school," Pendergast said. "So for the economic interest and public interest, we can serve that facility at far lower cost than the city can and the rates we quoted the School District are standard rates for that type of service."
School Board's decision
The School Board decided to go with SCEC after hearing proposals from SCEC and New Richmond Utilities (NRU) at a Board meeting. The Board discussed both proposals at length before voting.
District Administrator Morrie Veilleux said at the time, "The School Board accepted the proposal from SCEC because we believed it had the most positive effect on the Board's operating cost for electrical services to the new high school. We saw a $40,000 per year savings if we went with the SCEC proposal."
The Board chose SCEC's alternative bid.
Veilleux said he has responded to Cernohous' letter.
Veilleux made it clear at the last Board meeting that the School District is standing by their decision to go with SCEC.
Dennis Horner, New Richmond's city administrator/utilities manager, said he can understand what the school is doing by choosing SCEC, but "they need to take a better look at the proposal and analyze it. We can provide better and cheaper service."
"It would have made sense to have a third party review the proposals from both entities," Horner said.
Public Service Commission
The Public Service Commission (PSC) will ultimately be the entity to settle the dispute between SCEC and NRU.
The Commission has recently initiated a "fast-track" dispute process to address such issues. However, both parties involved must agree to the "fast-track" approach.
While NRU requested this approach, SCEC did not agree to participate in the new process.
"I feel that doing so (NRU going to the PSC) unnecessarily jeopardizes the economic savings the School District will realize from benefitting from electric service from SCEC," Pendergast commented
"We think as a public supplier of electric for the city of New Richmond we are the best choice," Cernohous claimed. "We will have a new substation south of town, we have one on County Road GG and the school is halfway between them. We are asking the PSC to make a determination."
"We were selected by the School District to be their power supplier and at this point in time we will do what is necessary to defend our electric service rights and to serve the new high school as the District wishes," Pendergast said.
It could well take up to a year for the PSC to rule on this dispute. Their ruling would be not who should provide power to the school, but who has the legal right to provide that power.
But in the meantime, the new high school should be up and running without any interruption in power.
Both NRU and SCEC have agreed to temporarily provide the school with power until the issue is resolved.