Editorial: Post Bulletin April 16, 2007

RPU, customers invest in Rochester's future
By Dick Landwehr

RPU’s plans for an Emissions Reduction Project began taking shape well before power plant emissions became a popular topic. With construction plans well under way, and financing now in place, the next two most visible milestones will be a ground breaking this Fall and dedication of the plant improvements when they come on line in early 2009.

Completion of financing places Rochester Public Utilities well ahead of most United States electric utilities in responding to emissions control projects for generators that use coal as their primary fuel. Rochester is able to be a leader in the industry because the RPU staff and Board of Directors began addressing the issues in earnest in 2003. And more importantly, I am very proud of being part of a Citizen Board that had the political will to move beyond State and Federal requirements, on a voluntary basis.

The foundation of that political will came from ongoing conversations with many Rochester residents that led to thorough research of the issues and of the best proven solutions to the challenges. Ultimately a plan was created that was reviewed by representatives of the medical community, the environmental community, the business community, the regulatory agencies and the thought leaders of the electric utility industry. It took a great deal of hard work locally to determine a balance among all of these interest groups. I applaud their efforts. Ultimately, the recommendations that came from that effort dove-tailed nicely with long awaited national standards handed down by federal regulatory agencies that finally allowed RPU to act in a fiscally responsible manor on a level playing field.

This is a time to note the milestone reached on Monday, March 19, 2007, when the financial markets confirmed Rochester’s vision, rewarded its changes in financial management policy over the last two years as well as its demonstrated collaboration between the environmental community and the business community. Specifically, the financial market (Wall Street) purchased, and closed, over $76M worth of RPU revenue bonds at the lowest interest rates seen in several decades, in part, due to an increase in the bond rating given to RPU as a result of its improved financial reserves.

Revenue bonds were the financing vehicle of choice due to the nature of the Emissions Reduction Project since the project benefits current as well as future RPU customers, the expense will be shared by both.

The significance of the closing on the financing is three-fold. First, the $34M Emissions Reduction Project (ERP) will reduce sulfur dioxides, nitrogen oxides, and particulates from the Silver Lake plant significantly by 2009; second, the utility refinanced $30M of existing debt on a natural gas fired combustion turbine generator plus $12M for additional infrastructure projects at more favorable rates. The bond sale will reduce RPU's debt service costs by several million dollars which is always in the best interest of the Rochester rate payer.

Now were all taught that nothing worth having is free. Cleaner air has a cost that comes with it. The citizens of Rochester have indicated a willingness to pay for the cleaner air while retaining the reliability that we need to be an economically viable city. Beginning in April, all customers of RPU will see a Clean Air Rider (CAR) on the RPU electric bill that is dedicated to paying the costs of these environmental improvements. The Rider is based exclusively upon the amount of electricity used by each customer.

The current project is not the end; it is a beginning. The Emission Reduction Project is the first project to further improve our environmental footprint while not impacting the need for reliability that can sustain Rochester’s economic engines. You will hear more about renewable energy initiatives, transmission improvement plans and natural gas fired peaking generators in the near future.

There is more to be done, but now is the time to take note of how far we have come and to announce the financial ability for RPU to address these issues.

Richard L. Landwehr, a local Rochester businessman, is Board President of Rochester Public Utilities.

About Rochester Public Utilities

As the municipal utility of Rochester, Minn., for more than 110 years, RPU provides high-quality and reliable electricity to over 45,000 customers. Water customers number more than 34,000. RPU continually investigates innovative technologies to help customers realize the best value from the services they receive. Current initiatives include fuel cell research, wind power, and photovoltaic offerings.

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