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Economic Development is . . . (increasing the flow) of capital through the community and reducing its leakage.

2011 EDIES Story 8 of 24: Traer Municipal Utilities reveals the answer that was blowing in the wind

The dozens of meteorological wind towers erected all over Tama County, Iowa to measure wind speeds, should have tipped you off by now that we have above average wind speeds and transmission lines compared to the rest of the U.S. But it was even before these appeared that Traer Municipal Utilities started investigating the possibilities of locally produced energy from wind. The ultimate goal was to proactively diversify their energy portfolio for reliability and hedging future energy costs. And in 2011 they erected the first commercially operated wind turbine in Tama County. The project was financed by the wind turbine developer with the $3 million future energy payments spread out over six years, and is now on track to produce 5 million kWH’s of energy annually, offsetting roughly 30% of Traer’s annual energy requirements.  We chatted with Pat Stief, Executive Director of Traer Municipal Utilities, about being a first mover in new technology in Tama County.  Remind me – what are the EDIES.

How we did it:
A consultant that does a significant amount of work with wind energy was contacted and asked to provide information regarding the wind speeds and frequencies in our part of the world. We determined there were sufficient wind resources to support the feasibility of a local turbine and began investigating methods to make it happen.

How we got the idea:
In late 2006 after our wholesale energy prices spiked we determined that alternative energy sources needed to be investigated to help us control future energy costs. During the same time period there was talk of Iowa legislators considering a renewable energy portfolio for all Iowa utilities. It was obvious that ownership of a wind resource could address both issues.

Our greatest challenge:
The biggest challenge we faced was financing such a large undertaking. The financial feasibility and effect on rates, if we went into the project alone, would have been negative. Because Traer Municipal Utilities doesn’t qualify for incentives and tax credits that allow ownership of this type of project make sense, we knew we were going to have to partner with the private sector to accomplish our goals.

How we overcame it:
We first considered attempting to form a group of investors locally that would have an interest in financing the project and gaining advantage of the incentives and credits. While we were working on developing this type of ownership plan we learned of a group, Norsemen Wind Energy L.L.C., that was already established and actively participating in these types of projects. We met with Norsemen and shared our ideas of municipal ownership. After several discussions we settled on an arrangement where Norsemen would construct and take ownership of the project for the first six years at which point ownership would be transferred to Traer Municipal Utilities. Initial ownership of the turbine allowed them to utilize available incentives, tax credits and other business deductions. Traer Municipal Utilities also realized a financial gain in that we were able to obtain ownership of the turbine at a price of about 1/3 of the installed cost. This is a true WIN – WIN situation for both parties.

Advice to others:
Keep your eyes, ears and especially your mind open to discovering unique opportunities. As has been said in many ways; think outside the box or envelope or whatever other cliché you might care to apply.

What is next:
TMU has partnered with FCTC of Dysart to obtain bandwidth for our internet system. This arrangement has allowed us to greatly increase our broadband capabilities and will immensely exceed our previous capabilities. Due to this increased capacity we will be able to offer our customers greater bandwidth. Shortly after the first of the year we will be announcing a new line up of available internet packages with increased speed and very competitive pricing.

For more information about Traer go to its website at www.traer.com.

Photo by Ellen Young [Pat Stief]


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