Photo by Deb Gau Granite Falls’ hydroelectric plant uses the flow of the Minnesota River to generate power for the city. This spring, $2.75 in state funding was approved to update the plant and replace one of its turbines.

GRANITE FALLS — It’s a project that will help keep a renewable energy source running for the city of Granite Falls. At the same time, repairing and expanding the hydroelectric plant on the Minnesota River will also have an important impact on city finances.

Granite Falls city officials talked about both aspects of the project Monday when state legislators visited. Rep. Chris Swedzinski, R-Ghent, Rep. Tim Miller, R-Prinsburg, Sen. Gary Dahms, R-Redwood Falls, and Sen. Andrew Lang, R-Olivia, all toured the plant.

Granite Falls Mayor Dave Smiglewski thanked legislators for their help this spring in passing a bill that will provide $2.75 million to upgrade the municipal hydroelectric plant.

“We just want to say thank you, to you four and the entire Legislature,” Smiglewski said. “For us, our $2.7 million is a pretty big deal.”

The bipartisan support the bill received showed “a really impressive willingness to find common ground and do some good projects,” he said.

Funding for the hydroelectric project will come from the state’s Renewable Development Account (RDA). The RDA receives annual payments from Xcel Energy for nuclear waste storage at Xcel’s nuclear power plants in Minnesota. Funds from the RDA go toward renewable energy development in the state.

Granite Falls plans to make about $400,000 worth of needed repairs at its hydroelectric plant. The repairs will help protect the hydroelectric generators and the dam on the Minnesota River. The remaining $2.35 million of the funding will be used to replace one of the plant’s three turbines. The new turbine will increase the plant’s hydroelectric capacity from 0.8 megawatts to 1.5 megawatts or more, city officials said.

“I think you’ll see we have a really worthwhile project,” Smiglewski said.

While legislators and city officials held a “ribbon cutting” on Monday, Granite Falls City Manager Crystal Johnson said the project is technically still in the design phases. Specifications for the building repair project would go before the Granite Falls City Council on Monday for approval, she said.

Being able to produce more electricity at the municipal plant will help the city as it deals with a loss of property tax revenue from the former coal-fired Xcel Energy plant in Granite Falls, Smiglewski said. Last year, the city learned the closed Xcel plant would now be considered “retired in place,” and its property value dropped nearly 31%. The city lost more than $112,000 a year in property taxes as a result.

To help cover the loss, the city of Granite Falls increased the amount of money it transferred to the general fund from the earnings of the municipal electric system by $100,000, going from $225,000 in 2019 to $325,000 in 2020.

Expanding the capacity of the plant will help meet the need for more revenue from the electrical fund. Generating more electricity locally will also reduce costs, and can help “shave” off some of the costs for power at peak times of demand, Johnson said.

Smiglewski said the old Xcel plant will be coming down in 2022. In the meantime, Granite Falls is trying to plan ahead for possible future development. Smiglewski said the city hopes to acquire more land for industrial development as Granite Falls’ current industrial park is running out of room.

“We have a very diverse economy,” Smiglewski said.

With its location near two major transportation corridors and railway access, Granite Falls is also well-situated for development, he said.