HomeMy WebLinkAboutA019 - April 28, 2026, Regular Meeting of the Ames City CouncilITEM #:23
DATE:04-28-26
DEPT:ELEC
SUBJECT:RESOLUTION CONTINUING COUNCIL SUPPORT FOR THE
CONSTRUCTION OF THE NEW THERMAL GENERATION PLANT
COUNCIL ACTION FORM
BACKGROUND:
At the April 21, 2026 City Council workshop, staff provided a presentation regarding the new
thermal generation project for Electric Services. The presentation included:
Revisiting the need for the new generation;
An explanation regarding why Reciprocating Internal Combustion Engines (RICE) units
remain the best generating option moving forward;
Major equipment procurement, costs, and when staff will return to Council for contract
approval;
Needed Generator Interconnect study with MISO;
Planned site layout;
Estimated annual savings from the discontinuation of waste-to-energy;
Sargent & Lundy's updated cost estimate for the project; and
PFM's financial review of funding and impact to electric customer bills .
Staff did not ask Council to take any action at the workshop. However, staff informed Council
that it would return at the April 28, 2026 Council meeting to ask for Council's continued
support of the project given the information presented at the workshop. This Council Action is
that request.
There is a large change in the estimated cost of the project; however, expected savings from
the discontinuation of waste-to-energy will cover the majority of the anticipated debt service
payments. Based on a review from the City's financing and bond consultant PFM, even with
conservative assumptions only small annual rate increases will be needed to fund the
generation project.
With the City Council's support, staff will proceed with the next steps, including continued
design, major equipment procurement, and plant development.
ALTERNATIVES:
1. Approve a resolution expressing continued support of the New Thermal Generation
project, and authorizing staff to continue the plant development, given the new cost
estimate for the project.
2. Direct staff to pause the continued development of the project. In doing so, this will delay
the purchase of major equipment and subject the City to continued price increases and
capacity shortfall risks.
1
CITY MANAGER'S RECOMMENDED ACTION:
With the Utility's aging electric generation equipment and the Utility's need to maintain capacity
to meet its growing electric peak demand, the City has begun a project to build new
generation. Sargent & Lundy, the Utility's engineering consultant, was asked to update the
project cost estimate that was created in 2024 for the Capital Improvement Plan.
The updated cost estimated has increased to $190,000,000 from $84,000,000. Due diligence
has been performed to validate and understand this new estimate, and outside financial
consultants have reviewed how it will be funded. It remains in the best interest of the
Electric utility to construct a new generating plant that will provide necessary
generating capacity, offer price certainty for electric production, and enhance the
reliability of electric service for its customers. Therefore, it is the recommendation of the
City Manager that the City Council adopt Alternative No. 1, as noted above.
2