Nussbaum lays out plan to repay bonds for electrical transmission line

FALLS CITY – In a special meeting Monday, the Falls City City Council approved a $20 million bond issue for the Energy Forward  Transmission Project to strengthen the city’s electrical grid and readiness for growth.

The city council confirmed its support for the transmission line at a May meeting, but there were some questions about how the $20 million bonds would be repaid.

City Administrator Anthony Nussbaum laid out the repayment plan that includes a recent rate increase for Falls City electric customers to meet the bond’s requirement of 1.25 percent debt coverage.

Nussbaum: “Our net profit for our utilities need to at least have that coverage.”

 

He said that coverage will be in place even if the utility had steady revenue through 2029, but the utility expects additional revenue because of the rate increase.

Beginning in 2029, the city needs an additional $658,000 in revenue to repay the bonds.

Nussbaum said that revenue will come from a 4 percent rate increase effective in October of 2024 and capacity sales going through the city’s power plant of about $550,000 a year.

He said once the city approves the bond ordinance it will reach a milestone on one of the grant terms in LB 977, where the state Legislature allocated $15 million to expand the electrical system.

Nussbaum said the state Department of Economic Development will issue the $15 million and the city could earn about $600,000 a year in each of the three to four years of transmission line planning and construction.

He said the $20 million is included in the capital improvements of the current rate study, so the utility expects to have funds available for normal infrastructure improvements.

 

Nussbaum: “You’ve got $20 million of bond dollars and you’ve got a $15 million grant, so, if  you have a $30 million project, $15 million of that is going to go direct to transmission only. That’s your only option if you want to match those dollars one-for-one. The transmission project, I think in the  feasibility study it came in under $30 million up to a little over $40 million. It kind of depends on routing, a lot of different pieces – how heavy do you want to build it. You know, do you want steel structures or wood structures and we’re not going to get that true cost until we get through that design stage and get the engineering done and bring those concepts back to the Board of Public Works and the council and say let’s scale this up, scale it down, what we do to maximize the dollars to get transmission project done but also leave some dollars on the table that we can utilize for our infrastructure improvements that we need within our distribution system.”

The city expects to have $5 million remaining for other electrical distribution work.

Frank Killingsworth motion to approve and motion passed on 7-0 vote with councilman Joe Buckminster absent.