An application is being prepared for a grant that could allow Lampasas to generate 1 percent of its electricity from renewable energy sources.

City staff are considering a former city landfill located east of Old Georgetown Road near U.S. Highway 183 as the site for possible wind energy generation and solar panels. The landfill stopped receiving material in 1988, and Randy Clark, director of public works for the city, oversaw post-closure in 1993.

The closest homes and buildings to the potential energy site are at least 1,000 feet away on Old Georgetown Road, Clark said.

Using federal "stimulus" funds, the State Energy Conservation Office is offering grants of as much as $2 million for renewable energy projects. Although City Manager Michael Stoldt said he still is seeking details about the grant program and about solar and wind energy costs, he tentatively estimated the installation of renewable energy facilities could cost $2.4 million.

In-kind donations of city land and services, Stoldt said, likely would provide at least a fourth of the $400,000 the city manager estimated Lampasas would have to contribute toward building a onemillion kilowatt-hour renewable energy facility.

If the Lampasas City Council decides to build such a facility, the city probably will have to take about $300,000 from reserves, Stoldt said. Lampasas had about $3.6 million in undesignated reserves -- in addition to 90-day emergency operating expenses -- when the 2009-2010 fiscal year began Oct. 1.

The council on Wednesday voted 6-0, with Councilman Evan Stubbs absent, to contract with HDR Inc., a nationwide engineering firm, for grant application services. The contract price is not to exceed $26,000.

Application deadline is Oct. 30. City staff could learn by the end of November whether Lampasas' application has been accepted, Clark said. Stoldt, Clark and Mayor Judy Hetherly said Lampasas has a good opportunity to receive grant funding.

If the city secures a grant, the City Council probably will have to decide by early December whether to approve construction of an energy generation facility.

"We may get through this [grant application] and find out it's not the best deal," Stoldt said, "but we won't know unless we apply."

Based on current prices and rate structures, if Lampasas relied on renewable energy for 1 percent of its electricity, the city would have to charge 14.8 cents per kilowatthour to pay for maintenance and operations, the city manager said.

Residential customers would see a monthly energy bill increase of about 87 cents, Stoldt said. "Small general" commerical customers would pay an extra 60 cents per month, and "large general" commerical electricity consumers' bills would increase by an estimated $7.93 per month.

Restructuring of rates, however, possibly could limit city utility customers' bill increases to less than $2 per month, Stoldt said.

"It will impact our customers today, but it can be minimized, and it's only 1 percent [of Lampasas' electric use]," Stoldt said of the electric proposal.

Several City Council members said they expect electricity increasingly to come from renewable sources in upcoming years. Councilman Jerry Grayson, for example, said if Lampasas gets a SECO grant, the city's matching funds will be well spent.

"We've got to look to the future," he said.

The City Council has not committed to building a renewable energy facility, Clark said. City staff will try to determine what burdens renewable energy use would place on the city government, the city's electric fund and Lampasas residents, he said.

Although electricity from traditional fossil fuel sources is less expensive than solar- and wind-generated energy, Stoldt said the past year's substantial drop in gasoline prices has inflated the price margin between fossil fuels and renewable power.

"Electricity is as cheap now as it's been since I've been here," said the city manager, who assumed his Lampasas post in October 2006.

The city's fuel factor adjustment recently dropped to zero, which saved customers about $5.50 a month, Stoldt said. He said he expects gasoline prices to increase in the coming months, which will raise the price of electricity.

Stoldt said renewable energy costs, on the other hand, won't fluctuate like rates for fossil fuelgenerated electricity.

Stoldt also said he expects technological advances to make renewable energy use more efficient and less costly.

"If you remember when computers first came out, they did a tenth of what they do now and cost twice as much," the city manager said.

Film for solar energy equipment must be replaced about every 20 to 25 years, Stoldt said, although solar panels -- more expensive than the film -- can be used for longer periods.

Stoldt said the former landfill location has enough room to expand a renewable energy facility beyond one-million-kilowatt-hour capacity. The facility could produce as much as 5 percent of Lampasas' electricity within the next 15 years, he added.

City staff have no plans, however, to stop purchasing power from outside sources, Clark said.

"We're still going to continue conventional operations," the public works director said.

Also at the recent meeting, the City Council voted 6-0 to waive the city's purchasing policy so city staff can expedite a Sulphur Creek retaining wall project in W.M. Brook Park.

Because creek bank stabilization work near the Western Street bridge came in $100,000 below budget, Lampasas has leftover grant money. If not spent by mid-January, the surplus grant funds will have to be returned, Stoldt said.

The purchasing policy waiver allows city staff to forgo paid public notices, which typically run during a two-week period.

"When you've got that short a time period, every week counts when you have to bid it, design it and get it built," Stoldt said of the time constraints for retaining wall work.

The project will be bid competitively, Clark said. The public works director added that he would try to notify local construction companies to give them an opportunity to bid.

The City Council may schedule a special meeting to award the bid.