City approves closing agreement with KMEA

6/28/2013

By SCOTT AUST

By SCOTT AUST

saust@gctelegram.com

During a brief special meeting Thursday morning, the Garden City Commission authorized the signing of a closing certificate and tax compliance agreement to assist the Kansas Municipal Energy Agency in issuing $5 million in revenue bonds to pay for the construction of three gas-powered electric generation turbines in Garden City.

The project was part of the agreement the city signed in January for KMEA to begin supplying electric power to the city starting next year.

Matt Allen, city manager, said Thursday's action was intended to make it clearer that the city backs KMEA's bond sale instead of just relying on the minutes of January's meeting in which the KMEA power supply purchase agreement was approved.

Mike Muirhead, public utilities director, said the power purchase agreement earlier in the year covered everything, but the city felt more comfortable moving forward with an additional formal action now.

"It does add some credibility for people who are buying the KMEA bonds that everybody's still on track for what we're doing," he said.

The tax agreement ensures KMEA and Garden City will use the funds appropriately for the turbine project, and that both entities will monitor expenditures to make sure funds go where they should go, Muirhead said.

In January, the city commission chose KMEA as the city's power supplier, effective Jan. 1, 2014. Part of the KMEA power supply portfolio includes installation of three Siemens gas-powered turbines in Garden City.

Referred to as the Jameson Energy Project, the turbines will be located adjacent to and directly north of the city's wastewater treatment plant on South Jennie Barker Road.

Muirhead said the Siemens SGT-400 modular gas turbines will be installed on foundations, but they could be made mobile if necessary.

Garden City's annual power load is about 65 megawatts. The turbines, when running, will provide 27 MW of that need. The rest of the city's power will be provided by KMEA through contracts, according to Muirhead. Garden City will buy excess power generated by other KMEA member cities in addition to the power it generates using the three turbines.

Site work on the Jameson project will begin in late July to early August, with the turbines expected to be delivered in mid- to late September.

"There will be quite a bit of activity going on with that. There are some other facilities that get built with this. We have some substations and some electrical components that will be part of it. It will ensure everything's connected properly and ready to run when needed," Muirhead said.

Testing of the units will probably start in late November to early December, and the commercial operation date, the date the turbines will officially be operational, is scheduled for April 2014.

"KMEA will start providing power on Jan. 1 for all of the city's needs. These three turbines will not need to be available then. We actually won't need those until June or July of next year. So we have room to get those in place and up and operating," Muirhead said.

The commission voted in early December to end its contract with Wheatland Electric Cooperative, though Wheatland will continue to supply power to the city through the end of 2013.

KMEA formed in 1980 when a group of northwest Kansas cities were looking to create adequate, economical and reliable long-term power supplies for their customers by sharing capacity, exchanging electricity and buying power on the open market. Initially, there were 21 member cities. Today, KMEA's membership includes 78 cities throughout the state. Garden City is joining KMEA Energy Management Project No. 2, which includes the cities of Ashland, Beloit, Hoisington, Lincoln Center, Osborne, Pratt, Russell, Stockton and Washington. The nearest member cities include Lakin, Cimarron, Hugoton, Dighton and Jetmore. Garden City will be the largest member city in southwest Kansas.

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