Sioux Center Considering Standby Electrical Generation

Sioux Center Municipal Utilities is considering whether to invest in local standby electric generation.  The current proposal would include about 12 megawatts diesel generation near Sioux Center’s north power substation. In an extreme situation in which power supply was cut off to Sioux Center, this standby generation would partially power the town, which has a total peak demand of about 26 megawatts. Also, it would generate electricity when electricity is limited or very expensive on the entire grid.

The idea of building standby generation has recently become more palatable as Sioux Center’s power provider, Missouri River Energy Services (MRES), increased how much they pay members like Sioux Center to construct and have standby generation ready to use.

“As more traditional, reliable electric generation like coal plants are being retired, MRES is looking at options like this to provide generation to its members into the future,” Utilities Manager Murray Hulstein said.

The estimated cost to build this standby generation is roughly $21 million. MRES is offering an initial payment of roughly $2.9 million plus 30 years of annual payments to Sioux Center starting at $708,970, potentially increasing each year.

Ultimately, payments from MRES would cover an estimated 70-80% of the total project cost – including 30 years of operating costs. To cover the local portion of the costs, Sioux Center may need to consider an electric rate increase, roughly $5 per month for the average residential electric customer.

“Even though locally we have had very reliable power, we’ve seen communities not too far from us be in situations where they experienced outages and really could have used standby generation. This ensures we have local control on maintaining some of that reliability.”

The Sioux Center City Council is reviewing this proposal with the goal of making a decision in early 2024 whether to proceed.