Wednesday morning Provo City became the proud owner of electric generating facilities in Cove Fort, Millard County. The purchase marks the final step in acquiring Mother Earth Industries, a geothermal power plant.
Mayor Joe Jenkins signed contracts committing the city to the power plant purchase - a $21 million endeavor - before taking off for the Thanksgiving holiday.City Council members gave him the go-ahead to sign purchase agreements at Tuesday's council meeting. City officials say the geothermal plant will bring additional power to the city at an inexpensive rate.
"I think it's a good idea for Provo City," Jenkins said. "We will get 10 megawatts for the same cost of 3.6 megawatts - what we are now getting."
The city has been getting power from the geothermal plant since 1985, but only as a small contract supplier for the Utah Municipal Power Agency, which is owned 80 percent by Provo and 20 percent by Spanish Fork, Salem, Nephi, Levan and Manti.
Now with the steam source purchase, the city plans to expand the facility to 10 megawatts by November 1989.
The plant will be purchased with Energy System Revenue Bonds (1988 Series A). Since the bonds are triple-A rated, have a 7.51 percent interest rate and are tax-exempt, the city will save $600,000 a year in the purchase, Jenkins said.
The contract includes the purchase of the simple title to 15 acres under the station and an undivided one-half interest in 2,500 acres around the plant. Mother Earth Industries has agreed to pay off all liens and will provide Provo with first rights to steam.
Mother Earth also will be responsible for providing three operating wells and one standby well. They will continue exploration and drilling while the city will be responsible for operating the wells and plant.
The city presently pays 69 mills per megawatt for Mother Earth Industries power, but once the city owns the steam source, power will only cost about 33 mills, equal to or lower than the average cost of power produced by the Utah Municipal Power Agency. A mill is equivalent to one-tenth of a cent.