President’s Letter
Ken Smith
District Energy St. Paul contributes to the economic growth of Saint Paul by offering organizations a real choice in energy services. By offering affordable, cost-competitive, and reliable services, we help the city attract and retain businesses, and we help our customers to thrive in their endeavors. We have also integrated adaptable technology, which has allowed us to offer our customers customized solutions as they renovate or expand their operations. Considering our role in community growth, we are tremendously proud to be keeping heating and cooling rates steady for the fifth year in a row.
Our team is highly aware of the importance of rate stability to our customers and the community and we work diligently throughout the year to complete system improvements on time and under budget. In fact, District Energy has been able to avoid rate increases in seventeen of its thirty-three years of heating service and eleven of its twenty-four years of cooling service. Our rates have actually stayed below the rate of inflation over the history of our company. The rate stability we have been able to achieve is specific to our demand rate, the non-energy related costs which includes energy production, energy delivery, operations and maintenance, repairs, capital expenditures, general and administrative, debt service, and working capital costs. Since District Energy was established, it has been a goal to keep customer costs as low as possible while providing the highest value of services. Our sustained practice of managing costs, optimizing efficiency measures, and streamlining system processes help us to continue to reach this goal today.
We recently received our second consecutive Standard & Poor’s rating of A-Stable, which speaks to our strong financial tradition, the diversity of our customer base, and focused business practices. We have achieved this milestone in part because we consistently offer our customers stable rates and efficient energy services. The Standard & Poor’s recognition benefits our customers since lower rates on capital mean that we can do more for the system with less expense. As a non-profit utility, all of the financial benefits are returned to our customers. As we work toward eliminating coal as a fuel source for heating and diversifying our system, we will continue to support vitality in Saint Paul and economic development by offering great services at affordable and stable prices. By helping our customers we help to strengthen and grow Saint Paul, which in turn helps our system to expand and improve its efficiency, which further benefits our customers. We look forward to continuing to grow and prosper together.
District Energy Plans Elimination of Coal for Heating System
District Energy has begun plans to end its use of coal after the 2020-21 heating season. The transition from coal reduces the heating system’s CO2 emissions by 27 percent or 21,000 tons. This is the equivalent of removing 4,400 cars from the road each year.
Our fuel transition is not mandated, but driven by our efforts to reduce greenhouse gas emissions, increase system resilience, and deliver a value proposition that is in line with customer expectations. The transition is now possible because of changes in fuel and finance markets and the availability of alternative resources to help meet the critical heating needs of our customers. These plans are not projected to increase rates or reduce heating reliability.
As we work through the transition plan, we will be seeking to incorporate greater efficiencies, emerging technologies, and more renewable energy sources. We will continue to explore the best opportunities to advance the system through renewable and efficient resources, while preserving our commitment to rate stability and service reliability.
The Plume Project uses Public Art to Spur Conversation about Community Energy
We are only 19 days away from the launch of the world’s first Plume Project, featuring three fascinating art installations using our steam plume as a canvas. The plume itself is the water vapor that remains after we use local biomass to generate electricity and heat through combined heat and power. This plume is fondly referred to as the cloud factory by the innovative artists who have developed this project. Last year, these artists received a grant from the Knight Foundation to develop a light projection project that will utilize this steam plume as the backdrop to help spur community conversations about energy.
There will be three unique public art installations this fall and winter. The first project kicks off on November 17, with Emily Stover who has enlisted local poets to engage citizens in an individual experience to encourage people to think about their relationship to the broader energy system. With a solstice kick off on December 22, Aaron Dysart will represent NASA Solar Dynamic Observatory data through an ever-changing light show on the plume. As spots and storms ebb and flow on the sun, color-changing flood lights inside the steam plume will shift and dim according to the data. For the third project, Asia Ward will be calling on Saint Paul residents of all ages to submit their drawings and photos on the topic of positive energy. During the Winter Carnival these drawings will be projected onto the plume engaging contributors and visitors in our positive, community energy story.
More information about the Plume Project is available at plumeproject.com, and you can follow the project’s development on Facebook and Twitter. We are excited to explore the amazing intersection of energy, art, science, community, and education through this project. If you are interested in supporting the efforts or becoming a sponsor, please contact Asia Ward 612-236-5059.
Plume Project from Asia Ward on Vimeo.
District Energy Receives S&P A- Rating
At District Energy we have focused of our operational process to manage our assets and to follow sound financial practices, because our financial strength directly impacts our customers and our system. This priority has helped us to keep our rates steady for the last five years, while continuing to make investments in system upgrades.
Our teams’ hard work paid off in 2013 when we received our first Standard & Poor’s (S&P) rating of A-/Stable. This month S&P has affirmed its long-term rating of A-/Stable for the bonds series 2013 A-E issued to District Energy St. Paul and District Cooling St. Paul. We pursued an S&P rating review as part of an organizational restructuring which merged District Cooling services under the District Energy brand.
According to S&P, the rating review reflects a series of credit strengths, including stable revenue under long-term contracts with a fairly diverse customer base, base rates that are adjusted annually to fully recover costs (including debt service) and an energy charge that can be adjusted monthly if necessary to recover changes in the cost of fuels, and well-managed assets, which are reliable and competitively priced. The A- rating is significant within the utility industry. Investment grade ratings of BBB- or above are seen as a major threshold for business stability and financial continuity.
Community Giving
Our community is fortunate to have a wealth of strong non-profits that help to make Saint Paul a great place to live, work, and visit. From providing health care and food pantries to arts and entertainment, these organizations serve individuals and families and bolster our community. District Energy is committed to supporting these organizations through our community giving program with a focus that mirrors our organizational mission to support our customers, our community, and our environment. This fall we are proud to be giving to the great endeavors of United Hospital, Regions Hospital, Friends of Saint Paul Public Library, Neighborhood House, Landmark Center, and the Plume Project, among others. We admire the work and dedication of these organizations, and we are grateful to have them as customers and collaborators.
International Visitors Tour District Energy
On Friday, October 16, the staff at District Energy hosted two international tours considering energy best practices. First, a delegation of thirty-five individuals from Germany that included government officials, energy experts, and business leaders and was led by Johannes Remmel, Minister for Climate Protection and Environment of North Rhine-Westphalia. The delegation is part of a five-year exchange program directed by Sabine Engel (University Economic Development) between the University of Minnesota and the German government established to explore the renewable energy technologies, policies, and markets in the two countries. The group spent several days touring the region talking with energy and environmental experts, exploring renewable energy projects, and discussing potential partnerships. District Energy’s Ken Smith has been a part of the exchange delegation for four years.
The second tour group also had University of Minnesota ties and was organized by Carissa Slotterback (Humphrey School of Public Affairs). The group of individuals from around the world comprised twenty-three individuals working with the International Energy Agency on the topic of energy strategies for cities and included a range of professionals across the realms of energy planning, urban planning, and academia.
We are honored that both of these groups of experts sought out District Energy St. Paul to learn more about our how our community energy system is a key solution for Saint Paul.
BOMA Services Expo
We joined other Saint Paul service providers at the annual Greater Saint Paul BOMA Expo on September 15. Our team had a great time connecting with customers. For all of our booth visitors, we shared the benefits of being connected to District Energy including our reliable delivery of heating and cooling, our stable and affordable rates, and the ease of system operation. Inspired by the theme Show your Minnesota Best, we hosted a meat raffle for some high-quality steak, pork, and bacon. Thanks to all of you who stopped by our both and congrats again to the big prize winners.
Great River Greening’s Buckthorn Blast
On September 17th, our team members joined Great River Greening for their annual Buckthorn Blast. Volunteers worked to haul invasive buckthorn and plant new trees along the Mississippi River in Victoria Park in Saint Paul. On one of the soggiest days of the year, employees took on the challenge with enthusiasm. It is our mission as an organization to be a part of the community and serve as environmental stewards, making Great River Greening a great volunteering partner. From its inception in 1995, Great River Greening has worked with over 10,000 volunteers to conserve Minnesota’s lakes, rivers, and natural areas, becoming Minnesota’s restoration leaders. We had a great time and hope to work on more restoration projects in the future.
Operating Engineers Seminar: All about Heat Exchangers
On Wednesday, November 11, District Energy will be hosting our annual Operating Engineers Seminar. The theme this year is “All about Heat Exchangers.” District Energy customer service engineers Jonathan Martens, Bob Ford, and Jeff Volovsek will discuss how to properly install heat exchangers, how to diagnose issues with them, how to clean them, and how to get help with yours. The presentation will also discuss why proper temperature sensor location is important. The event will be held at Rival House from 11:30 AM – 1:30 PM and lunch will be provided. If you are an operating engineer in a building connected to District Energy or if you know someone who would like to attend, please contact us.