Lakeland Electric staff let the commissioners know that LE is running $47.3 million over their initial budget and a year behind schedule in building their RICE engine power plant.
David Holdener, LE’s power plant construction manager, gave an update on the construction of the six reciprocating internal combustion engines, also called RICE engines, purchased to help replace the power-generation capacity lost when C.D. McIntosh Unit 3 was decommissioned in April 2021.
Three city commissioners were present: Chad McLeod, Mike Musick, and Sam Simmons.
“Mr. Musick, you asked me a couple of months ago what happens when we get to the point we run out of money,” Holdener said. “…[W]e are at that point with things.”
“We had all these challenges out there, then we started purchasing major equipment probably about the time COVID hit,” Holdener said.
Holdener said the city sent its request for bids on the pre-engineered building to house the RICE engines out to 23 companies. He said he personally called five firms. The city received a single bid for nearly $5.4 million, roughly 54% higher than its estimate of $3.5 million.
The City Commission will vote Monday on whether to award a contract for all the above-grade contracting and RICE equipment installation to Rayco Industrial Inc. out of Selma, Alabama. It was the lowest of three bidders for the project at a total cost of nearly $62.8 million — the city had budgeted $26.5 million for this phase.
These costs may continue to rise as the project drags on because of delays. LE officials will ask city commissioners to approve a contract extension with consultants Sargent & Lundy through May 2025 or until the power plant is commissioned at the cost of an additional $1.87 million.
Holdener said Lakeland Electric staff are doing what they can to save money, but the utility won’t be cutting corners.
“Our goal is to build a sustainable, operable, maintainable plant with those things that protect us and keep us running in the forefront to make the plant reliable and serve us for a very long time,” he said.
Holdener said he expected to have most of the equipment ship this month, with the RICE engines shipping over from Germany in September.
Lakeland Electric will by exercising its one-year extension to the power purchase agreement with the Orlando Utilities Commission keep buying energy as needed to power residents’ homes through December 2024. Holdener said OUC will not agree to extend the contract past that, if needed, as it has its own priorities and projects headed into 2025.