North Dakota University System Review January 2018

University of North Dakota Steam Plant

Issue: Condition of Steam Plant Project Need

“The Steam Plant, a critical

support building, is in the

worst condition of all UND

buildings, with a score

(FCI) of 0.55.

Five of the seven boilers

are well past the design life,

and the other two boilers

are in need of immediate

repairs. The question is not

if the plant will fail; the

question is how soon the

plant will fail.”

Solution: North Dakota Century Code 48-02.1(Infrastructure Development by Private Operators)

• Alternative procurement process allows Developer/Constructor selection based on qualifications

• Enables Public Private Partnerships (P3) and construction of a fee-based facility

• 3rd party ownership over O&M term• Terms as long as 50 years with guaranteed handback

facility condition• Allows other ancillary mechanical and electrical

improvements throughout campus in support of steam plant

Anticipated New Costs for Steam vs Status Quo

$1,000,000

$3,000,000

$5,000,000

$7,000,000

$9,000,000

Projected Status Quo

Distribution System CapEx Allocation

Plant Cap Ex Allocation

Distribution System Operations

Fuel (Coal/Gas)

Plant Operations

New Plant + Efficiency Improvement Debt

$11,000,000

Projected New Plant

Further Cost Reduction Opportunities• Finance Rate• Finance Term• Restructuring Finance• Additional Efficiency

Improvements• Reduced Gas Usage

(beyond Projections)• Lower Construction

Costs• Lower Operating

Costs

$10,700,000$10,700,000

Timeline Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Project Development Agreement

Steam Plant Design Phase

Schematic Design

GMP Design (40-50%)

Air Permitting

Application

Permit Review

Campus Demand Investment Grade Audit

Firm Pricing & Contract Development

UND Review

Contract Executed

Steam Plant Implementation

Final Design

Procurements

Site Prep/Temp Services Prep (if required)

Steam Plant Construction

Steam Plant Commissioning

Steam Plant Production

Demand Side Implementation

2020

Phase 2 Phase 3

2018 2019

Opportunitiesfor Schedule Compression

UND Paid Penaltiesfor Non- Performance

Capital Expenditures covered for the Term including Agreed Upon Handback Condition

Benefits to UND

Campus Improvements to offset deferred maintenance

Relationship with Off-TakersRetained Asset Value AND Maintained Plant

N+1 Redundancy On Campus