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Fate of UWRF power plant left to repair bill

March 10, 2011

If Gov. Walker’s budget repair bill passes, the UW-River Falls central heating plant may be sold to a private company creating additional costs for the university and state, said Heating Plant Operator Bill Girnau.

The bill gives the Department of Administration authority to sell or contract out any state-owned heating, cooling, or power plants to a private company.

According to the bill, the sale can occur without a biding process and without the approval or certification of the public service commission.

Director of Facilities Management Mike Stifter said it is atypical that a state resource as large and influential as heating plants would be sold without a bidding process.

This is not the first time that an attempt to privatize state heating plants has occurred in Wisconsin.  In 2005, a bill spearheaded by then-State Rep. Scott Jenson that sought to sell state power plants, was vetoed by then Gov. Jim Doyle.

The net profit that the state acquires through the sale will go towards the budget stabilization fund. The state currently faces a $136.7 million budget deficit for the current fiscal year. Wisconsin’s biennial budget deficit will inflate over the next two years to $3.6 billion, according to the bill.

Although Gov. Walker has implied that selling the states 32 heating and cooling plants will improve the financial situation for the state, Stifter said he thinks it is because of political reasons.

“No one from the UW System, the DOA or from UWRF campus would agree that this is done for financial reasons,” Stifter said.

Power plant operator Greg Elliot has worked for the heating plant for 32 years and said he doesn’t understand how the state and the university will benefit if the heating plant is sold to a private company.

There may be a short-term gain with the sale of the plant but it will be a long-term liability to the campus and the taxpayers, said Elliot.

If the heating plant is privatized, the universities goal of sustainability may be severely hampered and the university might see financial setbacks as well, Stifter said.

“From an economics standpoint, we’re also going to be more apt to feel the market pressures from rising fuel costs over time.  That is generally buffered now with fuel contracting on a State wide level versus what may be more campus focused going forward,” Stifter said.

Girnau has worked for the heating plant for 32 years and said he runs the plant as economically lean as he can.  The pride Girnau has for the plant exudes from him.  Sitting in his office that is decorated with hunting memorabilia and pictures that hark back to when he was in the navy in the 1960s, he exclaimed that the plant is his home away from home.

Girnau said he operates the plant under three guidelines: efficiency, reliability and safety.

One way that Girnau said he is reassured that those guidelines are met is through routine maintenance.  In the last ten years, the state spent around one million dollars to maintain and renovate the heating plant, Girnau said.

“The plant is ready to go for another 40 years,” added Girnau.

The plant is an integral part of facilities management and they often work together and share resources. The plant uses electricians and plumbers from facilities if a particular job within the plant warrants a specialized skill, said Girnau. There is a lot of flexibility with facilities management and if a private company comes in they would have to bid out those jobs separately incurring an additional cost to the university, said Girnau.

Girnau also questions how a private company can operate the heating plant cheaper and more efficiently than he is.

Currently, the heating plant is exempt from paying taxes but if a private company takes over, the company will have to start paying taxes, said Girnau.

The added costs of taxes along with purchasing fuel will make it particularly hard for a private company to turn a profit, said Girnau.

The company may look into cutting wages and benefits of the seven full time heating plant employees but the money saved would be marginal, said Girnau.

The moral throughout the heating plant has waned and several of the workers are worried about losing their jobs, Girnau said.

If the plant is privatized, Girnau said he wants the company to run it well and succeed. He said he would like to continue working for the company but doubts that they would keep him on.

The central heating plant was built in 1964 and supplies heat to the entire campus. The plant predominately burns coal and natural gas but can also burn biomass and low sulfur fuel oil. The estimated value of the plant is $14 million.

The budget repair bill passed through the assembly but is currently stagnate in the Senate.  The senate is one democratic senator short of a quorum as a result of 14 democratic senators fleeing the state more than three weeks ago.