Mike Phillips generated some excitement at Monday’s Iola City Council meeting.
Council members signed off on Phillips’s request to pursue a purchase agreement to buy three 2-megawatt diesel generating units from High Plains Power Systems LLC.
The plan is to install the generators adjacent to the city’s north industrial substation near the Russell Stover Chocolates plant, Phillips said. The structure will be identified as Power Plant No. 3.
The deal is similar to a purchase the city completed in 2021 to buy other diesel generators, Phillips said.
Here’s the kicker.
The generators will likely be used sparingly, if at all, because the cost to burn diesel is substantially more expensive than using the city’s natural gas-fired generators.
Nevertheless, their generating capacity is vital to the city’s ability to purchase energy at a wholesale rate and to add value in capacity credits to sell to other municipalities when possible, Phillips noted.
Though the city hadn’t budgeted the necessary $2 million for the generators, it has the capacity to dip into its electric reserves to pay for them in cash as well as the facilities to house them.
Councilman Jon Wells noted that in the past, estimates for large-scale generators were placed at $600,000 to $800,000 per megawatt, or nearly twice what the Caterpillar brand generators will cost.
“That’s an amazing price,” Wells said. “I’m really in favor of this. I’ve always been in favor of expanding our generation.”
The cost is so low, City Administrator Matt Rehder noted, that he expected the generators to pay for themselves within as little as 2 ½ years.
Assistant City Administrator Corey Schinstock noted Iola’s purchase from High Plains is identical to a purchase Chanute is making with the same company.
“There were six available,” Schinstock said. “Chanute is buying the other three.”
High Plains is working with Chanute and Iola simultaneously on the purchases.
“That’s how we’re keeping the price down,” Phillips noted.
Council members voted 7-0, with Max Grundy absent, to move forward with the contract.
