Wasatch Energy Systems has signed a new agreement for steam sales from its burn plant to Hill Air Force Base after almost eight months of negotiations.
The new, three-year contract will provide a lesser amount in annual steam sales revenues, estimated at $1.5 million. That compares to as much as $2.4 million under the former contract.The new price for steam is $3.35 per 1,000 pounds of steam vs. the former amount of $4.90 per thousand.
Despite the reduction, Wasatch officials said they are pleased they didn't lose Hill as a customer entirely. That's because Hill is its only customer. The burn plant was built east of Hill Air Force base to provide the base with steam created by the incineration of garbage.
Wasatch operates the Layton burn plant and landfill that serves Davis and Morgan counties.
Hill initiated contract negotiations last November because it believed it could generate its own steam at a lower price. Energy prices have been lower than anticipated since the late 1980s.
Steam sales account for 12 percent of Wasatch's annual budget and Wasatch officials were conservative in preparing its 1998-99 budget. Only $832,000 in steam sales revenue - the remainder of the current contract that expires at the end of November - were used to balance the new Wasatch budget.
Wasatch executive director LeGrand Bitter said the additional money in unplanned revenues from steam sales means the district won't have to dip into as much reserve fund to balance its budget.
The new contract does allow either party to terminate the contract with a 180-day notice.
Wasatch has been providing steam to Hill since the burn plant opened in 1987. Previously, the base used its own oil-fired plants to produce steam for heating and other uses.
Excess electricity is also sold by Wasatch to Utah Power, but that's not a significant money-maker for the district.