#2 Authorize change order of $750,000 to proceed with energy enhancing modifications at WWTPDIVISION OF PUBLIC WORKS MEMORANDUM
August 12, 2011
TO: City Council
FROM: Daniel L. Lynch, Utility Director
SUBJECT: Authorization for the City Manager to Issue a Change Order in the amount
of $750,000 to the Wastewater Treatment Plant Construction Contract in
Order to Proceed with Energy Enhancing Modifications to Produce
Additional Electricity and Fuel for Municipal Vehicles.
Summary
The City’s Wastewater Treatment Plant (WWTP) has used methane gas (biogas) to
produce electricity since wastewater treatment in the City started in the 1930’s. As part
of the ongoing WWTP construction project the electrical generating equipment at the
plant was upgraded. Currently the Utility produces approximately $180,000 of electricity
per year which is sold to Alliant Energy. The proposed energy enhancements in this
project will approximately double the amount of electricity produced at the treatment
plant generating new revenue for the City in the amount of $146,000 for treatment of
high strength waste and it will potentially save $60,000 over the next ten years in
gasoline and diesel fuel purchases. This project will have a positive effect by
generating approximately $3.5 million in fuel savings and new revenues over the next
ten years.
Department Recommendation
The Utility Director and Wastewater Treatment Plant Superintendent recommend that
the City Manager be authorized to issue a change order to the treatment plant contract
to include these energy upgrades which will take advantage of lower cost and
experienced onsite contractors.
Manager’s Recommendation
The City Manager recommends approval of the change order. I believe that by moving
forward with this alternative energy source we will be contributing environmentally as
well as providing potential cost saving to the City long-term.
Suggest Motion
Move to authorize the City Manager to issue a change order in the amount of $750,000
with the intent that the necessary equipment for this project is installed and operational
by the end of 2011; and express the intent of the City Council to borrow funds at a
future date to finance these improvements.
Analysis
In 2008, the City of Janesville embarked upon a major upgrade and expansion of its
wastewater treatment plant, which is currently nearing completion. An essential element
of the project, which emphasized several energy-efficient improvements, was the
enhanced use of biogas resources made available by the treatment process. These
enhancements included: digester upgrades; a biogas storage and gas conditioning
system; and microturbine generators with heat recovery. These enhancements have
greatly increased the plant’s electricity production and greatly reduced the use of the
plant’s natural gas boilers for heating the digesters.
The proposed project will build on the success of these initial enhancements. The plant
will begin accepting high-strength waste from out-of-town generators to maximize the
volume of biogas (methane) production. Some of this additional biogas will be further
conditioned into BioCNG and used to fuel vehicles that the Utility will begin purchasing
later this year, offsetting annual petroleum purchases. Gas not used for vehicle fuel will
be used to generate additional electricity.
The cost of this project is mostly to acquire the necessary equipment and can be broken
out as follows:
Gas Conditioning Equipment $100,000
CNG Vehicle Fueling station $200,000
A 200 KW Microturbine $300,000
CNG Modifications to 5 Vehicles $40,000
High Strength Waste Receiving Station $20,000
Various Contractor Costs $40,000
Contingencies & Misc. $50,000
Total Project Cost $750,000
This project will generate significant new revenue for the City, and will also reduce the
City’s dependence on traditional vehicle fuels such as gasoline and diesel. The vehicle
fuel savings of this project will begin at about $8,000 per year, but increase annually to
about $60,000 per year over the next ten years as vehicles are routinely replaced.
The increase in revenue from this project will come from two sources. First, the Utility
will begin accepting some types of very high strength waste water which is a by-product
of certain industrial processes (i.e. the manufacture of ethanol). This waste will not
harm the treatment plant operations as it will be fed directly into the anaerobic digesters.
This waste will stimulate the methane forming bacteria in the digesters greatly
increasing the amount of biogas produced. Acceptance of this waste will generate an
additional $146,000/year in revenue. The second revenue source from this project
comes from the increase in electricity that will be produced from the additional biogas.
This additional electricity will be sold directly to Alliant Energy and is expected to create
about $150,000 per year in new revenue for the City.
The Utility has been in discussions with the Wisconsin Department of Energy
independence which has expressed interest in this project and has visited the
Treatment plant to see our current operations. They support our initiatives, but have not
offered any grants at this point. Even without any state or federal grants, an investment
in this project of $750,000 is estimated to return over four million dollars in the next ten
years.
Proceeding with this project at this time is recommended for several reasons: The
current interest rate environment is favorable. The same contractors will be used to
build these facilities as built our current facilities. Alliant Energy has indicated that they
presently have capacity in their bio-fuel rate tariff to accommodate our increase in
electrical production capacity, which may not be available in a few months. (This tariff
allows Alliant Energy to pay the City $0.12/KWH instead of something below
$0.085/KWH.)
cc: Eric Levitt, City Manager
Jay Winzenz, Director of Administrative Services
Wald Klimczyk, City Attorney