City Council ‘steam team’ leader Vernon says work underway to create an equitable way to dispense $21 million in steam conversion funds

City Council member Monica Vernon, the City Council’s “steam team” chief, reports that the city’s Pat Ball, utilities director, and Mike Sable, a special assistant to the city manager, are helping to work up an approach to dispense $21 million in state funds to help those in the downtown steam network convert to their own systems.

ernon said the effort involves devising an “equitable” way to hand out the funds. She said a proposal may be coming in front of the council as soon as next week.

The money consists of $5 million in state I-JOBS funds and $16 million in money set aside by the Iowa Department of Economic Development.

The City Council brought absolute clarity to the lingering downtown steam issue two weeks ago when the council voted unanimously not to allow public funds to be used to rebuild Alliant Energy’s flood-destroyed Sixth Street Generating Plant as a coal plant.

There had been a push to find federal and state money to rebuild the Alliant plant –which provided low-cost steam power to the key industries Quaker and Cargill, the two hospitals, Coe College and the downtown and near downtown — as a coal plant. Alliant, a private entity, cannot directly receive public money, and so it would have had to be allocated to the City Council for use.

The council, though, concluded that burning coal and environmental issues associated with it represented the past, not the future. Council members said a new era of taxing emissions from coal plants will make mean that coal may not be as much of a bargain as some now think it is.

Solution to downtown steam troubles now focusing on public dollars to rebuild Alliant’s Sixth Street plant as it was — as a coal plant

Federal, state and city officials all are looking hard to see if an infusion of public dollars could rebuild Alliant Energy’s flood-damaged Sixth Street Generating Station to what it was.

That is, a coal-fired plant delivering relatively low-cost steam for heat and other uses for the downtown and the near downtown, vital industries nearby, including Quaker and Cargill, the hospitals and Coe College.

Tom Aller, president of Alliant subsidiary Interstate Power & Light Co., emphasized in comments to The Gazette’s editorial board on Thursday afternoon that Alliant as a private utility cannot and is not seeking public financial support to rebuild the Sixth Street plant as a coal-fired plant.

At the same time, Aller said that Lt. Gen Ron Dardis, head of the Rebuild Iowa Office, City Council member Monica Vernon, who is heading up a council “steam team,” and others have talked to Alliant Energy recently about what options the utility had given customers if the Sixth Street station was rebuilt as a coal-fired plant.

Aller said he suggested soon after the June 2008 flood that public officials ought to consider the issue of rebuilding the Sixth Street plant through the prism of economic development for the city. He said public officials are now doing just that.

The city’s Vernon on Friday afternoon acknowledged that there is now a flurry of discussion on the federal, state and city level over rebuilding the Sixth Street power plant as a coal plant to provide steam.

“There are more alligators in this thing,” Vernon said. “It’s potentially doable.”

She said the Iowa Department of Economic Development may be looking to contribute $16 million to such a plan and, additionally, that U.S. Commerce Department’s Economic Development Administration could be a funding source. Some city dollars would be involved, too.

In early 2009, the Sixth Street Generating Station’s eight largest customers, which have used most of the plant’s steam, rejected Alliant’s proposals to rebuild the plant as a coal plant because the proposed future steam rates, which would have had to cover the capital costs of rebuilding, were too high.

Aller said an infusion of public dollars to pay to rebuild the plant or to pay much of the cost of rebuilding it would allow Alliant to provide steam rates lower than had been proposed and lower than the current sky-high rates, which this winter were part of a temporary steam system using natural gas. With public dollars used for rebuilding, steam rates, though, would be higher than they had been before the flood, he said.

Dee Brown, Alliant’s regional director of customer operations, was much more direct that Aller when she said, unequivocally, that rebuilding the Sixth Street Generating Station as a coal plant is the only real long-term solution for the customer group — Quaker, Cargill, the hospitals, Coe College, the downtown and others — that has depended for many years on the steam plant and the steam pipeline system running from it.

Alliant could rebuild the coal-fired plant in a year, Brown said, while other long-terms solutions — one idea is to build a $250-million waste-to-energy plant — would take five or more years.

The biggest customers like Quaker and Cargill, upon which holding the group of steam users together depends, aren’t going to wait five or more years for a long-term solution, Brown said.

Aller said Alliant believes it can rebuild the coal-fired plant with new, reconfigured equipment with a natural-gas backup that will allow the plant to meet federal emission standards into the future.

Such a coal-fired plant would provide a reliable energy source with stable steam rates, which come with burning coal, and the plant also would provide a redundant natural-gas backup system, Aller said.

In recent months, much of the discussion in and around City Hall has centered on figuring out a short-term solution — perhaps subsidizing current high steam rates associated with Alliant’s interim, natural-gas system for five years — while an effort was made to come up with a long-term solution.

Aller said it has been clear to him that no one will spend money on a short-term solution unless there is a clear, long-term solution in place. He said state officials seem to agree with him on that now.

The city’s Vernon said the city is still working to begin a long-term study on a “green,” waste-to-energy power plant. But she said such a system might be appropriate elsewhere even if public money is available to help rebuild Alliant’s coal-fired Sixth Street plant as a coal plant.

A view from U of I power plant: a new biomass power plant in downtown Cedar Rapids would be ‘claim to fame’ for the city

The University of Iowa’s power plant has been burning oat hulls, a byproduct of cereal-making at the Quaker plant in Cedar Rapids, since 2002.

In a discussion on Wednesday with Ferman Milster, the university’s associate director of utilities and energy management, Milster was asked about burning biomass materials like oat hulls for power and what the future might hold for such examples of renewable energy.

He was informed, too, that some community leaders in Cedar Rapids have pitched a proposal to Iowa’s congressional delegation for a huge federal grant that would pay to build a new biomass energy plant in downtown Cedar Rapids. City Hall, Alliant Energy, the downtown and nearby industries have been trying to figure out how to replace Alliant Energy’s flood-damaged Sixth Street power plant, which had provided low-cost steam.

In his comments, Milster couldn’t have been more excited about the future of burning biomass materials or more thrilled about the pursuit of a new biomass plant in downtown Cedar Rapids.

He said the current state of climate awareness and the current federal administration’s awareness of the issue will mean an increased emphasis on all kinds of renewable energy.

“You’re going to see a biomass fuel market develop,” Milster said. “And oat hulls will be a piece of that, an important piece.

“But there are numerous other sources that are byproducts of industrial production of some form. … And we (at the university) have been very, very active in identifying other sources of biomass. We have a laundry list of those.”

He said his power plant at the University of Iowa is readying to experiment burning corn cobs.

“Biomass fuel combustion is going to gain popularity,” he said. “The economics are going to start to favor it as we start to regulate carbon emissions. If the federal government regulates carbon emissions, that radically increases the value of biomass fuel.”

As for the idea of a biomass power plant in downtown Cedar Rapids, Milster suggested that the city may have a “perfect storm” in place to make such an idea work.

He noted that Cedar Rapids has an existing steam distribution system that serves the downtown and nearby industries. There’s a year-round need for power that a plant would produce. And the city, an agriculture-processing center, has multiple sources of renewable energy.

“A new district energy plant – a combined heat and power plant – is the ideal thing,” Milster said. “It just makes perfect sense. And you could make all renewable energy.

“Wow. What a claim to fame for Cedar Rapids to come out of the flood with a renewable energy plant and a district energy system. That’s super.”

Alliant COO Protsch talks about life after low-cost downtown steam, about the new world with Obama, about a proposal for a $200-million biomass plant

It was a little telling when Brian Fagan, mayor pro tem of the City Council, quickly looked into the audience at Friday’s State of the City speech when asked about the future of what had been a low-cost steam energy system for the downtown and vital industries and others nearby.

And Fagan drew plenty of chuckles when he saw Eliot out there and asked if he wanted to take the question on.

Eliot is Eliot Protsch, the chief operating officer of Alliant Energy, the utility which had provided that cheap steam from its aged and now flood-damaged and disabled Sixth Street Generating Station.

Amy Reasner, the local attorney who was moderating the event, wasn’t sure if the State of the City speech was designed to have those in the audience help define the city’s current situation.  But in any event, Protsch came to the stage and took to the microphone.

In short, Protsch put it this way:

There might be a solution for the “very large industrial customers” located near the plant. But customers in the downtown and even farther from the Sixth Street plant will need to look for another solution.

“I believe at the end of the day, what I just asserted to you, will end up being where we find ourselves in Cedar Rapids,” Protsch told the audience of about 300 gathered in The Ballroom at the Crowne Plaza Five Seasons Hotel.

He added a caveat: “… absent a very large subsidy from somewhere, with the emphasis on very large.”

In an interview at the end of the Friday event, Protsch broke the issue down this way:

The 100-year-old Sixth Street Generating Station worked to provide low-cost steam to eight large users and another 200 smaller ones in and around downtown because the plant had few capital costs and it burned relatively cheap coal without any giant burden required for emission controls.

In fact, it was sufficiently cheap to burn coal to boil water to produce steam that piping the steam through an old, inefficient, poorly insulated and sometime-leaky piping system didn’t matter much.

All that changed with the June flood, which disabled the plant.

Now Alliant and its customers, he said, face two choices, neither attractive.

Protsch said the coal alternative would require huge capital costs — $52 million to retrofit the plant and likely $150 million or more in the years ahead to add emission controls to it to meet the changing and emerging environmental regulations. The capital costs, which would be built into the utility rates, make the idea unworkable, he said.

The natural gas alternative is different: It doesn’t require high capital costs upfront, but he said the cost of natural gas is both higher and more volatile. Suddenly, producing steam with natural gas has a much higher cost, and one too high to be able to ship steam great distances through an old, inefficient piping system. Short of digging up downtown streets and replacing the steam pipes, this idea won’t work, he said.

Protsch said Alliant has been telling smaller users, including all of those steam users in the downtown, that they should look at another solution for their steam needs. Many customers already have converted to their own systems, he said.

“I believe they all should be looking hard at that,” he said. “Because absent -– again absent a big subsidy from somewhere –- I just don’t think it’s going to be economic for anybody to restore the steam service the way it was burning coal.”

The story could be different for large industrial users like Quaker and Cargill –– Alliant continues in ongoing discussions with them, he said — next to the Sixth Street power plant. He thought “a natural gas facility of some sort” could work for them. Alliant wouldn’t have to be part of that solution, but “we’d like to be,” he said.

“Mostly, we want our customers to put in the most efficient steam production capability that they can so that they remain viable,” Protsch said. “So that’s our goal. Whether we have a role in it or not is less of an issue.”

For some months, there has been much discussion at City Hall, from local legislators and from Alliant itself about the lobbying effort in Washington, D.C., and in Des Moines and even at City Hall to find some kind of short-term and/or long-term subsidy to solve the downtown steam matter.

Asked about that, Protsch said Alliant representatives were in Washington, D.C., in recent days was being discussed with Iowa’s Congressional offices about the building of a $200-million power plant that would burn biomass to produce energy in and near the downtown.

Protsch noted that such an idea had been studied in the past.

If any such federal grant would surface, he suggested that it would be made to the city of Cedar Rapids, who then might lease land from Alliant to build such a biomass facility.

“We’re open to that,” he said.

For those looking at the big national and global energy future, Protsch said they need look no further than Cedar Rapids.

“Look at Obama’s budget bill,” he said. “It’s got carbon trading. Coal generates more carbon than natural gas, and you’ve got to build that into the cost.

“This is a microcosm of national energy policy, right here in Cedar Rapids. Because it’s an economic analysis associated with burning coal, biomass or some other fuel versus natural gas.

“It’s a microcosm of putting energy production closer to where it is utilized or moving energy greater distances either in a pipe or wire. It’s a manifestation old infrastructure being replaced by new infrastructure with vast differences in capital costs …”

In short, it isn’t good news in any event for those who had loved the low-cost steam from the disabled Sixth Street Generating Station.

It will cost too much to retrofit the Sixth Street Generating Station and add emission controls – Protsch doubted the small plant could win any environmental waiver — to burn coal.

And it cost too much to pipe more expensively produced steam from natural gas though an old, inefficient system of pipes.

“Absent” some big subsidy, Protsch repeated along the way.

Halloran and Fagan bring Condition of the City speech downtown; city needs sales tax, they say; Alliant exec has few hopes for downtown steam

Mayor Kay Halloran and Brian Fagan, mayor pro tem, told an audience of about 300 at Friday’s Condition of the City speech that a 1-percent local sales tax will help the flood-damaged city rebuild.

“We need it,” Fagan said bluntly, when asked about Tuesday’s upcoming sales-tax vote during the noontime event in the Ballroom of the Crowne Plaza Five Seasons Hotel.

The annual event is sponsored by the League of Women Voters of Cedar Rapids/Marion.

To a question about the viability of a low-cost steam system in the downtown, Fagan turned to Eliot Protsch, Alliant Energy’s chief operating officer, in the crowd.

Protsch came to the microphone to say that there “may be” a solution to the steam issue for large users of the steam system, including the Quaker and Cargill plants. But he said it was “difficult” to see how steam, which had been provided by Alliant’s flood-damaged Sixth Street Generating Station, could be provided to the downtown “absent” a very large subsidy.

On the sales-tax question, Fagan said the estimated $18 million a year that the sales tax will bring to the city for five years and three months will allow the city to rebuild properly. Passing the sales tax also will show federal and state lawmakers, from whom the city is asking disaster help, that Cedar Rapids is doing its share to “support ourselves locally,” he said.

Mayor Halloran noted that the City Council will use the sales-tax revenue to buy out, repair and replace flood-damaged housing vital to the city’s work force.

“I don’t want residents of Cedar Rapids leaving (town),” Halloran said.

City Manager Jim Prosser, who joined the mayor and Fagan during the  question-answer period, said the city’s share of flood-related costs could come to $500 million even if the city and community secure substantial federal and state funds. “That’s the number,” he said.

In prepared remarks that reprised ones made at the City Council meeting Wednesday evening, Halloran said the city remains “open for business” despite the 2008 flood and its aftermath. She said the council promises to be “vigilant” with its budget and to work hard and deliver efficient government.

Halloran noted, too, that the she and the council continue to push the Iowa Legislature to stop its “draconian” ways and give Cedar Rapids and other cities the freedom to raise revenue from diverse sources. That will mean the city won’t need to be so heavily on property taxes, she said.

Halloran had Fagan focus his comments on the city’s flood-recovery effort, the costs of which are “staggering,” Fagan told the audience. He said the needs and costs don’t get better if they are ignored.

As he did on Wednesday evening, Fagan defended the City Council’s use of outside experts, who he said are helping guide the city through a community recovery that could cost $5 billion. The $5-million cost for the help, he said, is small in relation to the damage.

“Yes, we needed outside experts. Yes they are ‘consultants,’” said Fagan in acknowledging that it was issue for which the council has taken criticism.

Those in Friday’s audience also asked if the city can get too much public input before it acts and if lobbying efforts to obtain disaster relief have failed.

On the question of public input, Fagan said other communities that have gone through disasters have told Cedar Rapids that their ability to get projects started and finished had been hampered by not taking time up front to listen to the public.

Prosser said cities easily can make decisions about rebuilding, but he said the key is to make decisions that actually get implemented. Without adequate public input, they don’t, he said. He pointed to Tulsa, Okla., which he said we still trying to put a flood-protection system in place 25 years after its devastating flood.

Halloran, Fagan and Prosser all noted that much has been done and is being done to lobby the federal and state governments for disaster relief. But Prosser said the truth was that “this terrible disaster doesn’t have a simple solution.”

The League of Women Voters put Friday’s attendance at about 300, which is down from 359 people who attended a year ago.

From the podium, Halloran said the audience she was addressing looked “very intent.”

“I think they care what happens to the city, and as long as we continue to tell them what we are doing, they will recognize that we’re doing a very big job,” the mayor said.

Can City Council ‘steam team’ solve steam issue for industries near downtown, the hospitals, Coe College and the downtown? Is a city power plant in the offing?

At council member Monica Vernon’s urging, the City Council last week created a four-member “steam team” to try to see if City Hall might help salvage a low-cost steam utility for industries near the downtown, the downtown itself, the city’s two hospitals and Coe College.

The council has expressed worry about the future of steam system before, but has little action to show for it.

Vernon – fresh off a lobbying trip to Washington, D.C., with council colleagues Justin Shields and flood victim Jerry McGrane – said more action than talk would be in the offing.

But it was McGrane, known as a specialist in neighborhood and housing issues, not utility issues, who stepped out and provided a glimpse of what might be coming.

McGrane reported last week and repeated at the council meeting that federal officials told the Cedar Rapids contingent during their visit to D.C. that federal dollars might be available for a new city-owned municipal steam power operation, particularly one that might be on the cutting edge environmentally.

Let’s wait and see.

It was back in September that the council first commented publicly about steam when some members contemplated subsidizing steam rates. The council had learned then that Alliant Energy had told steam customers dependent on the utility’s flood-damaged Sixth Street Generating Station that it would provide steam from temporary boilers this winter for four to five times the previous cost.

Suffice to say the customers can’t endure such a price hike for long. Some building owners in the downtown already have abandoned Alliant’s steam system, installing their own boilers to provide heat.

In early January, Alliant announced that it had not reached an agreement with its eight large customers – which include Quaker, Cargill, the two hospitals and Coe College — to provide steam for next winter. Steam is used for heat, sterilization and industrial processing.

However, last week, Alliant announced to the City Council that it had met with the eight big customers again with a new offer that was now under consideration by the customers. The new offer would provide steam for the next three to five years at rates significantly lower than the current ones but still significantly higher than the rates that the customers had paid prior to the June flood.

At the same time last week, though, Coe College and St. Luke’s Hospital told the council that they both were considering Alliant’s new offer even as they were heading out to try to secure $4.65 million in federal money to build their own steam operation.

Coe and St. Luke’s both said they still were interested in a solution that would provide reasonably priced steam and that would keep the existing group of steam users together.

Alliant representatives said the value of the utility’s latest offer to the large customers is that it would keep them together and the steam infrastructure in place to buy some time for a longer-term solution to be found.

One idea that the City Council wants to investigate is the burning of municipal solid waste and sludge from its waste-water treatment plant to generate energy.

The council has given approval for a $1-million study to see if it makes sense to burn solid waste and sewage sludge to generate power.

As for the council’s steam team, its members are Vernon, McGrane, Shields and Pat Shey.

McGrane says federal funds might be available for city to get into the steam utility business

The city of Cedar Rapids already has city-owned utilities -– a water plant, a waste-water treatment facility and a sanitary sewer and storm sewer system. It also considers its garbage pickup and recycling operation as a utility.

Council member Jerry McGrane on Tuesday suggested he might be pushing his council colleagues in the direction of creating another utility, one that would create steam for heat and other uses in and near the downtown.

McGrane made note of his lobbying trip to Washington, D.C., last week with council colleagues Justin Shields and Monica Vernon to talk to Iowa’s Congressional delegation and some federal agencies about federal funds to help Cedar Rapids with its flood recovery.

McGrane said the Cedar Rapids delegation was told that federal money might be available to support the reestablishment of a downtown steam system if the city itself actually was involved in the ownership of such a utility. The thought is the city could have a private entity run the operation and ultimately buy out the city’s investment after a number of years.

It remains to be seen: McGrane is more of a decisive voice on matters concerning neighborhoods and housing.

However, council member Monica Vernon said on Tuesday, too, that the city had to figure out a solution to the steam problem.

The problem exists because the June flood damaged Alliant Energy’s aged Sixth Street Generating Station, which had produced electricity and inexpensive steam and ran it through a network of Alliant steam pipes to Quaker and Cargill and other industries near downtown, to Coe College, the city’s two hospitals and the buildings downtown.

This winter, Alliant has created a temporary setup to provide the steam, but at a price four to five times the previous price with no promise of rebuilding to prior more reasonably priced steam again.

This week, Coe College and St. Luke’s Hospital announced plans to seek federal funds to build their own steam system, and they will be in front of the City Council tonight to talk about the plan.

The two entities, though, said this week they are still open to a broader solution to the steam issue, though Pat Ball, the city’s utility director, on Tuesday forewarned the council not to expect any big news at its meeting tonight.

An Alliant spokesman said the same.

Alliant customers Coe and St. Luke’s seek federal disaster funds for their own steam plant

Coe College and St. Luke’s Hospital are preparing to build their own operation to produce steam now that Alliant Energy has signaled it does not plan to rebuild its flood-damaged Sixth Street Generating Plant.

 

In a memo to City Hall, Coe and St. Luke’s said they will be seeking the City Council’s backing as the two entities pursue federal funds in the $4-million range from the U.S. Department of Commerce for a replacement steam system.

 

The memo, signed by Ted Townsend, president and CEO of St. Luke’s Hospital, and James Phifer, president of Coe College, states that proposed charges to customers that Alliant said were needed to rebuild the Sixth Street Generating Plant “were not economically viable” for either Coe or the hospital.

 

Using a temporary steam setup this winter, Coe is facing energy costs of $1 million more than they had been paying a year when the Alliant plant was making electricity and also steam for the downtown and near downtown, Coe’s Phifer says.

 

St. Luke’s and Coe are among a small group of larger users of the Alliant steam operation that includes Quaker and Cargill while a larger group of smaller users in and near downtown also have depended on the cheap steam from the Alliant plant.

 

The City Council has talked for a few months now about wanting to play a role in keeping a viable steam system in place downtown even if Alliant is not involved.

 

Both Coe and St. Luke’s say they are still open to a collective solution with other partners. At the same time, they need to get something more affordable in place by next winter, the entities’ executives say in their memo to the city.