Mother Nature may have a reputation as being impetuous, but when she is treated right she will give everything she's got to help out mankind.
At least that's what seems to be happening at Mother Earth Industries, a geothermal plant in Cove Fort, Millard County. And Provo City officials hope it keeps on happening - especially now that they have announced plans to purchase the plant and its steam source for $21 million.Provo City Council members voted 6-1 this week to put together the bond financing for the purchase. Councilman Steve Clark cast the only dissenting vote, saying the purchase was too risky and the city should explore other energy sources.
Council Chairman Ron Last pointed out that the vote would put the financing in place but would not commit the city to purchasing the plant. The city is still working out contract details.
The natural steam source at Mother Earth Industries (MEI) stems from previous volcanic activity in the area and was discovered in 1985. It became an energy source when wells were drilled and modern equipment was used to route the steam through large turbines, condensers and generators.
"We think it is a proven technical plant," said Mayor Joe Jenkins. "There is not much risk in the technical side or in operation and costs. It is more risky because something could happen to the steam source, like an act of God, but we will get power at a lot lower rate."
Provo tapped into the resource in 1985 but has recently moved to purchase the steam source, not only because the city needs an additional power source but also because it is a way to save residents money on their power bills in coming years.
"Because of the way we will do our financing at MEI, there will not need to be any rate increase in 1989 if everything goes according to plan," Jenkins said.
The council approved a 9.8 percent rate increase at the beginning of this fiscal year. Jenkins said energy supply and demand forecasts predict a 6 percent rate increase in 1990 that will average out at 5 percent increases in the following years.
In order for the city to purchase the MEI power source, Jenkins said the average cost of mills had to be under the average costs of Utah Municipal Power Agency mills. MEI power costs 38 mills and UMPA power averages out at 69 mills. A mill is equivalent to one-tenth of a cent.
Provo City will actually purchase the steam source for the UMPA, which is 80 percent owned by Provo and 20 percent owned by Spanish Fork, Salem, Nephi, Levan and Manti.
Jenkins said it is critical to get another power source on line because next October, UMPA will lose 5 percent of the power it gets from the Western Area Power Administration's hydroelectric plants. Less energy will be available because more cities are purchasing that energy source.
The $21 million used to purchase the plant will come from Series C bonds that were issued through Provo City in 1985 to purchase additional power sources. The bonds are tax exempt and have a 7.5 to 8 percent interest rate.
Because the Series C bonds expire Dec. 15, Jenkins was eager for the council to take action on financing the project.
If the city were to purchase bonds now, they would come with a 10.5 to 11 percent interest rate and would not be tax exempt because of the Tax Reform Act of 1986. The code no longer allows tax-exempt bonding on certain types of projects, Jenkins said.
The city has agreed to pay $8.6 million for the present Cove Fort facility and will spend $7.6 million to expand the facility to 10 megawatts. A hydrogen sulfide system costing $1.3 million will also be installed to comply with Environmental Protection Agency standards.
The remaining bonding funds will go into reserve accounts, to bond insurance and to pay for interest.
Under the proposed contract, MEI will be responsible for maintaining the wells and for all exploration in finding wells to bring on line. The city will be responsible for drilling any additional wells, the mayor said.
Mother Earth Industries currently puts out 3.6 megawatts of power for UMPA, but Provo plans to expand the facility to 10 megawatts by Nov. 1989.
Steve Christensen, the Cove Fort supervisor for Provo, recently demonstrated how powerful the steam source can be during a press tour. After opening the valve to a 2-inch line on a well, steam shot 400 feet in the air.