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Council hesitates on research funding

Recognizing the potential local geothermal resources holds for both short-term and long-term economic development, momentum continues to build towards contracting research to settle questions about the extent of the aquifer providing geothermal water and energy.

However, as of Tuesday night’s meeting of the Pagosa Springs Town Council, geothermal stakeholders, county commissioners and the town officials appear split over how that research should be conducted.

During Tuesday’s meeting, Pagosa Springs Town Manager David Mitchem told council that a vendor responding to the town’s RFP (for establishing a geothermal utility) had proposed conducting the research at no expense to the town. As such, Mitchem said, council should wait until bids were in before deciding on how to fund geothermal research.

As reported in last week’s edition of The SUN, funding for a baseline study of geothermal resources was proposed by County Commissioner Michael Whiting during last week’s meeting of the Pagosa Springs Community Development Corporation. Whiting’s proposal involved pulling $30,000 from CDC contributions ($15,000 each from the town and county) and using those funds to pay for the majority portion of the baseline study’s $36,000 price tag.

The rest of the study’s cost would be paid for by the Geothermal Advisory Group, a collection of geothermal stakeholders and interested citizens.

It had been proposed that the Geothermal Management Company (GMC — composed largely of representatives from NREL — the National Renewable Energy Laboratory) would conduct the initial research to determine a geothermal baseline — a cursory glance at the local aquifer to determine how use of geothermal water affects volume and temperature.

In October, NREL provided local officials with a preliminary study on local geothermal resources that posited the Pagosa aquifer to be significantly larger than previously thought, with implications that use of geothermal resources could be expanded. The study concluded that further research would be necessary to determine the full extent of the area’s geothermal resources.

The report also stated that data from a previous study on local geothermal resources, conducted over 30 years ago, was unreliable and incomplete.

Soon after the release of the NREL report, council heard a proposal from Hardin Geotechnical, Inc., a company that has provided geothermal heating and cooling systems for a number of clients. The Hardin representatives essentially proposed establishing a geothermal utility in town (with Hardin as the vendor) that would replace the town’s bare bones enterprise.

Met with initial enthusiasm (a Phase I build-out would cost around $15 million and expand the town’s geothermal energy system from about 30 existing customers to almost 500 customers), town officials backtracked earlier this year, deciding that a project of that scope warranted an RFP such that other geothermal companies had a chance to bid on providing the town’s utility.

Principals from the GMC returned to Pagosa Springs in February, spending two days addressing local government officials, geothermal stakeholders and interested citizens on the necessity of research to determine the potential for expanded geothermal uses. It was during a GMC presentation to council that it was determined GMC would be paid $7,000 to assist the town in drafting the highly technical utility-provider RFP.

That RFP was issued March 16, with an April 15 deadline.

However, it was apparent that the RFP the town had released had not met GMC’s approval. During an April 5 phone interview with SUN staff, Gerald Huttrer (GMC president and NREL consultant) stated that he had “red penciled” the town’s RFP and sent his revisions to Mitchem.

At Tuesday’s council meeting, Mitchem stated that a revised RFP would be issued and that the deadline would be extended until April 22. Mitchem said yesterday that, “The revised RFP will combine Mr. Huttrer’s comments along with some clarifications to questions some vendors have asked.”

Mitchem told SUN staff that a decision on the utility vendor would be reached by May 9.

The matter of a revised RFP and its timeline were not the primary issue at Tuesday’s council meeting, however. It was how research would be conducted and funded that led to most of the discussion.

It was apparent that council was adverse to NREL conducting the research, despite expressed consensus from the CDC board, the Geothermal Advisory Group and the BoCC.

After describing the conversation at the March 28 CDC meeting as “a favorable discussion” in regards to reappropriating CDC funds for a geothermal study, Mitchem added, “There’s great interest in that study from the well-owners. There’s good movement, there’s momentum.”

Mitchem then shifted gears, saying, “One of the vendors has incorporated essentially the same study into their bid,” and concluded, “it may save us $36,000.”

Despite that momentum Mitchem had described, it had been apparent that council member Darrel Cotton was determined to oppose an NREL study. During last Thursday’s joint town/county work session (when study funding was discussed), Cotton said that such research was unnecessary, referring to data collected in the 1980s.

Cotton reaffirmed his stance Tuesday night.

“I appreciate Lund and Huttrer’s efforts,” Cotton said. “I don’t know what we’re going to get for $36,000.”

“People have been doing measurements for decades,” Cotton said later in the meeting

Cotton also stated several times that he was not confident with NREL’s ability to provide “deliverables” from its proposed research.

“It could be as much as a quarter million dollars,” he said, referring to proposed drilling that would constitute a second phase of the research.

Representing The Healing Waters Spa and Resort (a geothermal stakeholder and member of the Geothermal Advisory Group), James Denny expressed frustration not just at council’s rejection of NREL’s proposed work but at the potential delay in starting the study.

Stating that the Geothermal Greenhouse Partnership (the primary player in the Geothermal Advisory Group) had already contracted with NREL to conduct the study, Denny added, “We need the study; the whole town needs the study. I understand the deliverables haven’t been clearly defined but this is something very important.”

Denny also contradicted Cotton’s assertion that previous research had provided sufficient aquifer data, citing the October NREL study’s conclusion. “According to that report,” Denny said, “we don’t have the data.”

SUN staff asked Mitchem if town attorney Bob Cole had determined if vendor conducted research would be appropriate or a conflict of interest. Mitchem responded that Cole said no conflict existed.

Bill Hudson followed up on that line of questioning from the audience, asking if it wouldn’t be better to have an independent, objective study done, “In the most scientific method as possible, as opposed to someone who has a vested interest.”

Council member Stan Holt responded to Hudson that he didn’t believe that a vendor conducting research would affect the RFP process.

Likewise, Hardin Geotechnical vice-president of engineering Robert Sparks said that conducting research was stipulated in the RFP, saying, “Whoever wins the bid, they’re going to have to hire the scientists to do this.”

In fact, research is not a stipulation of the town’s current RFP.

With council reaching consensus that it would wait until a vendor had been selected before deciding on how to proceed with research, Mitchem said, “Unless instructed otherwise, I will extend the RFP process one week and the bid closing one week.”

While much of the momentum — and enthusiasm — regarding the expansion of geothermal use continues, council’s decision on Tuesday represents the first real schism on how best to proceed. With a revised RFP scheduled for release April 12, and bid closing pushed out to April 22, it remains to be seen if the town will choose to leave data collection up to scientists or to a company seeking to establish a geothermal utility in town.

The BoCC is scheduled to make its own decision regarding that research at its Tuesday, April 19 meeting.

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