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Hibbing utility approves main transformer purchase, authorizes full engineering package for Southern Interconnect
Summary
The Hibbing Public Utilities Commission on July 15 authorized a $2.88 million purchase of a main transformer from Virginia Transformer and approved a $2.21 million detailed engineering contract with Electric Power Engineers to move the Southern Interconnect project from conceptual design to construction drawings.
The Hibbing Public Utilities Commission on July 15 approved awarding RFP 25-03 to Virginia Transformer Co. for $2,883,539 and authorized a full detailed engineering package with Electric Power Engineers for $2,213,889 to advance the Southern Interconnect transmission project.
The purchases were presented by General Manager Luke Peterson, who said the Virginia Transformer bid offered the lowest cost and the best lead time and that the unit is domestically produced in Idaho. Peterson told the commission the transformer vendor has been a supplier on prior distribution substation projects and that staff had a positive experience with delivery and support.
The engineering contract will move the project from roughly 10% design to 100% design and construction drawings. Under the proposal, EPE targets a 30% design completion in October, 60% in December and finished construction documents by February 2026. Peterson said the package includes surveying and final route selection and represents about 11% of the overall project budget.
Commissioners asked about contract milestones and cancellation exposure. Peterson said typical payment milestones include progress payments after final drawings, a payment on shipment and a final payment after on-site commissioning testing; on previous Virginia Transformer work a large portion of the price was held until commissioning. He said staff would negotiate final contract terms and return to the commission with details.
Commissioner Hart asked about bid timing, noting January–March is a competitive bidding window; Hart asked staff to seek schedule assurances in writing. Peterson said staff would request contractual surety on schedule before signing. Peterson also said the commission would ask the city council to exercise a local review process at its next meeting, which staff said could allow more direct local participation in permitting and speed the timeline rather than relying solely on a state-level review.
The commission moved, seconded and approved both actions. The motion to award the transformer was made by Commissioner Stokes and supported by Commissioner Hart; the engineering package motion was moved by Commissioner Hart and seconded by Commissioner Stokes. Staff will negotiate contract terms, report cancellation/retention terms to the commission and proceed with the procurement and design schedule.
Next steps include finalizing contract terms with Virginia Transformer, executing the engineering agreement with Electric Power Engineers, completing route/permitting tasks and returning procurement/contract milestones to the commission for transparency and approval as needed.
