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Olmsted County not ready for new district energy plan

Committee decides to split from proposed city, DMC effort

Drone - Downtown Rochester
Olmsted County Government Center and Third Street Southeast bridge in downtown Rochester. Photo taken March 12, 2019.

Olmsted County commissioners appear ready to pull the plug on a district energy plan.

“I really don’t want to get into a district energy policy with non-government people,” County Board Chairman Matt Flynn said.

A district-energy system typically involves buried hot and cold water pipes used to heat and cool multiple buildings in a defined area.

While the city and county currently share steam energy provided by the county’s Waste-to-Energy facility, plans for a revamped system have included discussions with the Destination Medical Center Economic Development Agency.

“I’m leaning to go with everyone building their own,” Flynn said during a recent meeting of the county’s three-person Administrative Committee. “It’s way less cost.”

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Mat Miller, the county’s director of facilities and building operations, said estimates show building independent standalone systems would cost $10 million to $12 million for the six buildings served by the current steam system.

Building a new district system to serve the same buildings is expected to cost at least $13 million, depending on the fuel source and design.

Committee members Jim Bier and Stephanie Podulke agreed with the go-it-alone approach, citing a history of public-private efforts involving the city that have not gone as expected, including the Rochester City Council’s recent decision to delay a potential transit development using county land.

“I’d just as soon strike out on our own,” Bier said.

Rochester Community Development Director Cindy Steinhauser said the county decision doesn’t rule out establishing a district energy system, since the data collected allows flexibility in moving forward.

“We’re able to take it and analyze it through a city lens and see how the private sector can jump on,” she said.

She said it’s unclear what businesses or other private entities could benefit if the city opts to create its own system.

“We know there is a potential for capacity and it could become a recruitment tool or retention tool for businesses in close proximity,” she said.

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Kevin Bright, director of Energy and Sustainability for the DMC EDA and city of Rochester, said a district energy plan will provide potential benefits, regardless of who participates.

He said study continues to define potential utility savings, as well as the ability to reach the city’s established goals to reduce greenhouse gas emissions. He said the program could also reduce reliance on unsightly equipment for individual buildings and benefit downtown air quality.

“There are other things that you can’t really calculate, but they are there too,” he said.

What has been calculated is a potential $200,000 annual utility savings, but commissioners said it would require years to recoup the added implementation costs.

While added savings could be found if the system expands to private businesses, commissioners said the potential opportunity also leads potential risk and uncertainty.

Steinhauser said she understands the concern since taxpayer funds are involved, but she added it’s an opportunity needing study.

Using separate systems, the county will be responsible for heating and cooling it’s portion of the city-county Government Center, as well as the nearby work-release facility.

The city will provide service to City Hall, the Rochester Public Library, Mayo Civic Center and the Rochester Art Center.

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Miller estimated the cost for the county’s standalone system would be approximately $4 million, but added the county has time to plan, since the existing steam operation continues to work.

Depending on the county’s financial situation, he said a request to fund a new design could emerge next year, which would enable work to start by the end of 2021 or in 2022, if commissioners opt to move forward.

If the county disconnects from the steam line, the city could continue using the energy until it establishes its own system, but Steinhauser said she’s hoping to address options with the city council in the near future.

Randy Petersen joined the Post Bulletin in 2014 and became the local government reporter in 2017. An Elkton native, he's worked for a variety of Midwest papers as reporter, photographer and editor since graduating from Winona State University in 1996. Readers can reach Randy at 507-285-7709 or rpetersen@postbulletin.com.
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