Repository: UIHistories Project: Board of Trustees Minutes - 1980 [PAGE 328]

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1979]

UNIVERSITY OF ILLINOIS

317

Conversion to Oil/Gas, Abbott Power Plant, and Purchase Agreement with Illinois Power Company (Urbana)

(46) In 1972, three coal-fired boilers were converted and three new boilers were installed at Abbott Power Plant at the Urbana campus. Natural gas was the first choice for energy supply to all six boilers, and indications were that gas would be available. During the planning process, the University was informed by the Illinois Power Company that there would not be sufficient allocation of natural gas from pipeline suppliers to sell gas to the University for boiler fuel. Fuel oil was the second choice as an energy supply, and plans were revised to provide oil burners in the boilers. It was learned recently that the Federal Department of Energy could consider allowing certain institutions to burn natural gas for heating purposes if it replaces fuel oil. The current cost of natural gas is $2.70 per million B T U (fuel oil is $4.18 per million B T U ) , and therefore the University applied to the Illinois Power Company for gas service. Illinois Power has been granted a permit from the Illinois Commerce Commission to supply the Urbana-Champaign campus with natural gas for space heating requirements (which are about 60 percent of the annual boiler energy required for all purposes). The University also has applied to the U.S. Economic Regulatory Administration (ERA) for exemption from the Powerplants and Industrial Fuel Use Act of 1978, which prohibits use of natural gas in existing power plants. A favorable response from ERA is expected by August 1, 1979. It is now estimated that state appropriations anticipated for fuel purchases and utility services in FY 1980 at the Urbana-Champaign campus will be $2,600,000 less than actual cost. The primary reason is the unexpected acceleration in cost of fuel oil. (There has been an increase of 57 percent since August 1978.) Conversion of three boilers to burn natural gas or oil would reduce the anticipated FY 1980 excess spending for fuel by $1,500,000. In addition, savings of about $450,000 would accrue to Urbana auxiliary units during FY 1980 as a result of the conversion. The cost of converting three boilers is estimated to be as follows: Boiler equipment and controls Piping and associated plant materials Labor Engineering Contingency $186 90 210 30 34 $550 612 000 000 000 000 612

Illinois Power is initiating a project to install a new service line at no cost to the University but requiring easements for installation and maintenance of a pipeline on University lands. Authorization for such easements will be requested of the trustees prior to construction of the pipeline. Approval to purchase materials for the conversion project, which would be installed by University forces, will make it possible to complete the installation by December 15, 1979, the date used in estimating the FY 1980 cost avoidance. The chancellor at Urbana-Champaign has recommended that the comptroller and the secretary of the board be authorized to undertake the following: 1. The purchase from Midwesco Energy Systems of equipment and material components, including all controls and accessories, to convert three boiler units at Abbott Power Plant to burn natural gas and # 2 fuel oil. Bid proposals received: Amount f.o.b. Midwesco Energy Systems, Niles Zurn Industries, Inc., Erie, Pa R. R. Rubner Sales, Inc., Chicago $186 612 236 051 239 000 Delivered Erie, Pa. Erie, P a .