PUC

cancels

majority of contract with NNG

Action, effective next year,

anticipates link with Hutchinson pipeline

By RON LARSEN

Journal Staff Writer

NEW ULM -- The New Ulm Public Utilities Commission received Tuesday a preliminary 2003 budget that calls for a lean $371,088 in net income from projected revenues totaling $28,702,079.

The commissioners set a budget review meeting for Tuesday, Nov. 12, at 4 p.m. in the PUC meeting room. A second meeting, if needed, is scheduled for 5 p.m., Nov. 26 in the Library conference room, prior to its November regular meeting.

Buoyed by the favorable administrative law judge's ruling on the Hutchinson natural-gas pipeline project, the commission voted to terminate the majority of the Utilities Department's contract for gas with Northern Natural Gas Oct. 31, 2003.

The commission authorized its president to sign a letter of intent to cancel the contract that must be submitted to NNG before Oct. 31, 2002.

"We're canceling all of the 5,540 mcf except for the final 50 mcf to keep the valve open," Dan Sonnek, director of engineering, who was sitting in for Director Bruce Campbell, told the commission. "Also, we're not giving up our right of first refusal either, but we only have 45 days in which to do it."

Sonnek allayed commissioners' fears of not being able to obtain gas if the Hutchinson project fell through.

"We could still get gas, but it would be at a higher cost," Sonnek explained. "If we don't cancel, then our contract will roll over into a five- year contract at max rates."

"It's a reasonable risk," Commissioner William O'Connor said, in supporting the cancellation.

As to New Ulm's participation with a 5-mile feeder line to Hutchinson's pipeline, Sonnek said the connecting line is estimated to cost about $800,000, and the money for it would be taken from reserves as indicated in the preliminary 2003 budget. He said no bonding would be necessary.

"Our pipeline consultant is already working to shave off a little money.

We're fully expecting to get this rolling in the spring," Sonnek said.

The commission also recommended that the City Council approve the sale of 5,400 square feet of Public Utilities land for $1,620 near the vacated railroad right-of-way off German and vacated Ninth South Street.

Welcome to Our Home, LLC, which operates assisted-living residences, wants the land to square off its property, City Manager Brian Gramentz said.

New Ulm Public Utilities reported a net margin of $79,532 for September, raising the year-to-date net margin to $1,647,903, according to the director's report.