cgallant@medicinehatnews.com@CollinGallant
Medicine Hat city council approved a plan to twin its three-year-old north-end power plant at a potential cost of $66 million on Monday night.
Citing the need to have backup, on-demand, gas-fired power on hand to meet customer needs, council members voted 8-0 to build “Unit 17” after two years of planning in order to rebuild excess supply capacity.
“We are a must run facility – stranded in a way – and the requirement is that we must supply enough power to our customers at all times,” said Mayor Ted Clugston, citing a formula that allows the city enough power production capacity to fulfil needs with the largest generators offline.
“(Today) if we lost our major generator, we would not be able to supply our load.”
The original north-end generator, known as Unit 16, was also officially proposed as a way to ensure supply is met under the city’s unique power charter. But it has also been billed as a magnet for economic development as well as a source of huge revenue from internal sales and exports to the Alberta power market.
Many of the same points were covered again Monday for Unit 17, which would add 44 megawatts of capacity, and move the city’s total capacity to 299 megawatts.
“This is about having enough energy for our customers,” said utilities commissioner Brad Maynes during a brief statement as the emergent item was added to Monday’s agenda. “As the city grows and our commercial base grows … we do see a future in electricity and future beyond COVID when businesses ramp up. It is in preparation of better times that were taking steps today.”
Planning for the expansion was announced in 2018 and regulators approved the plan in June 2019 as local administrators signalled that the city was coming close to a point where local production might fail to meet demand in case of emergency outages.
Unit 16 was supposed to act as that backstop. It came online in late 2017 at a cost of $55 million, but within months, two new contracts ate up the surplus capacity. Even with the delay in the Aurora Sun greenhouse, electric generation manager Brian Strandlund told council that two unit outages last month forced the city to import 56 megawatts to meet demand and paid a substantial penalty under the terms of an import contract.
“We have a legal obligation and one as a council to ensure our residents do not see brownouts,” said Coun. Phil Turnbull, chair of the utilities committee. He called it an investment in the business that keeps residents shielded from paying provincial transmission fees required of power importers.
Coun. Darren Hirsch said reliable power and excess power was “an economic driver.”
“When companies are shopping around, we have power available,” he said.
Coun. Robert Dumanowsksi said the $66-million figure “is not a small amount of money, but in line with other generation (units) we’ve talked about.”
Unit 17 would twin the existing Unit 16, and could be built in sequence over 18 months and potentially be in service in early 2022. Administrators have said the twinning, which was envisioned in the original design, would include cost savings that could now be compounded as work is approved in an economic downturn.
The original plant came in bout $10 million less than the $66-million budget, mainly due to favourable currency hedging on the US$25-million turbine, a General Electric LM6000.
Monday also saw the first reading of a $66-million borrowing bylaw for new the project’s estimated budget. That bylaw will return to council for approval on Aug. 17.
