100424 - The city's power facility pictured in this News file photo from May-- NEWS FILE PHOTO
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Overhauling a major gas turbine at the city’s power plant cost $4.1 million more than expected after the manufacturer found more work was needed, a city committee heard Thursday.
That work has already gone ahead, but could also lead to further overhaul of budgeting practice at the power plant.
The repairs on a LM-6000 turbine were approved last year in order to have a back-up unit on hand in case of a breakdown of an operating unit, which typically cost $26 million new to buy. That was attached to a $5.3 million budget, but council’s energy committee heard on Thursday that additional work pushed the total cost to $9.4 million. That was authorized by administrators who said Thursday that work simply could not wait at one of only two facilities in the world certified to repair the engine.
“It’s uncomfortable for staff and, we realize for committee and council as well,” said energy division head Rochelle Pancoast. “We are coming back after the fact and that’s not ideal, because the (budget process) and the practical business reality didn’t line up.”
Plant managers told committee that along with typical life-cycle work, mechanics needed to replace a high-pressure turbine ($2 million), a new heat shield and other replacements ($1 million each).
That work was only discovered after the unit was dismantled it was discovered that previously repaired parts had worn out ahead of schedule. The difference will be paid out of working capital at the power plant, but be recovered after six to 18 months in operation, said plant officials.
“It’s end of life and we’ve tried to limp it along, but that’s getting more difficult because it’s 20 years old and parts are not made anymore,” said Boyd Mostoway, the director of the power facility.
Committee chair, Coun. Darren Hirsch, said the expense is unwanted but unavoidable, “It’s like surgery or home renovations where, once you open it up who find more going on,” said Hirsch, stating that solving the budget approval difficulties could be difficult.
Including large contingencies could affect rates charged to consumers, creating an overcharge, or limit scope of work required elsewhere.
“There’s a bit of a quagmire… we’re in a business that’s quite expensive to be in.”
Complicating the timetable, the shop wouldn’t set aside the work - only two shops in the world are certified by General Electric to perform the work – and a local budget amendment would typically take about six-weeks.
Committee member, Coun. Alison Van Dyke said administrators can work on budget process, but said her concern was the bottom line in terms of cost recovery.
Mostoway said the work avoids a potential further shutdown of the unit and avoids requisitioning a rental to stand-in place in the mean time.Â
The next maintenance scheduled for three to six years, while the additional expense would be recovered after six to 18 months in operation.
“We do have to address what we’ll do with these anomalies in the future,” said city manager Anne Mitchell
Earlier this year, council approved of a number of projects in the power plant’s 2025-26 maintenance schedule in order to lock in service contracts and dates ahead of supply chain issues and fluctuating exchange rates.
That work, totalling $33 million, includes a complete $12-million, life-cycle rebuild of the LM-6000 generator unit at the Unit 16 power plant that was commissioned in 2018. That work will still proceed in original timeframe. Along with the major amendment, a $200,000 expense was added to replace a blower and dryer unit.
