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Storms proof of power plant's value, officials tell North Little Rock council

by Stephen Simpson | March 14, 2021 at 4:01 a.m.
North Little Rock City Hall at 300 Main St. is shown in this 2020 file photo.

The city of North Little Rock has poured millions of dollars into the Murray Hydroelectric Plant over the past few decades, which officials say will be worth the cost in the long run.

City Council members questioned the cost of insurance for the plant last week. Officials say the alternate electricity source helped prevent widespread power failures last month during historic snow storms.

The hydroelectric plant, which originally cost $88.5 million, relies on the flow of the Arkansas River to turn its turbines and power the plant's generators to produce electricity. Annually, the plant generates about 14% of the city's power.

Jessica Stephens, director of power supply for the North Little Rock Electric Department, said in an interview Thursday that the hydroelectric plant produced record highs in power last month.

Mayor Terry Hartwick said the Murray Hydroelectric Plant helped the city avoid the disaster that occurred in Texas when the winter storms passed through much of the country in February.

"We were very happy to have it during the storm when the temperatures were low and everyone was inside using energy," he said. "The hydro plant was operating at full capacity the entire time, which helped us from having to purchase energy when the market was at its highest."

Hartwick helped organize the plant's installation when he was mayor in the '80s.

North Little Rock dedicated the Murray Hydroelectric Power Plant in December 1988, a project city voters reaffirmed in a referendum four years earlier when they approved issuance of $139 million in bonds to build the plant.

In 2012, the North Little Rock City Council agreed to a refinancing of the plant's bonds that extended its final 2015 payoff date by another 10 years. By 2025, the total payoff of 40 years' worth of bond debt -- having been refinanced three times -- will have reached an estimated net of $320 million, according to North Little Rock Electric Department figures.

The City Council in 2013 approved a $4.59 million turbine work -- about twice the average annual cost for the plant's maintenance and repairs during the previous seven years -- in hopes of keeping the facility working for many more years.

This cost doesn't include repairs needed over the years because of floods, the most recent in 2019 on the Arkansas River.

The North Little Rock City Council approved last week an ordinance waiving formal requirements for comprehensive loss and business interruption insurance for the Murray Hydroelectric Plant.

Eric Herget, the city's insurance consultant, recommended insurance provided by Lloyds London for $286,216. He said this was the lowest bid submitted that included sufficient flood coverage.

Council member Charlie Hight asked during the council meeting if there was a lower price available on the insurance premium.

"I was wondering if going forward that we might be able to shop that around and see if we can save some money there?" Hight said, noting that $300,00 was "a lot of money."

Herget said the carrier was the best option; most carriers that would insure a facility that has flooded five times wouldn't provide the $50 million flood coverage Lloyds of London, a London, England-based company, has available.

Herget said the insurance will also cover all risk of direct physical loss or damage, including boiler explosions, machinery breakdowns, floods, earthquakes, storms and business interruption.

Despite the cost over the years, Hartwick said he views the Murray Hydroelectric Plant as one of his crowning accomplishments during his previous time as mayor.

"It's green energy," Hartwick said. "That river is not going to dry up anytime soon. In fact, I wish we had more of them."

Hartwick said initially the numbers might seem high, but in the long run the plant has saved the city money. North Little Rock doesn't have to pay for as much energy from the wholesale market, he explained.

"It keeps us insulated from market swings," he said. "The hydro plant keeps us out of the market for that amount of energy. This allows us to continue to budget annually every year and keep our rates stable. We are allowed to plan forward instead of being at the mercy of the market."

Stephens said the hydroelectric plant gives the city diverse power options.

"You don't want to put all your eggs in one basket, and the hydro plant allows us to accomplish that," she said.

Hartwick said green energy is good for the planet and worth the cost in the end.

"Anything that is worth having is going to cost money," he said. "What it has cost and what it has saved in the end I would gladly do it again."

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