Buck Wargo
CITY HALL - Glendale is preparing to issue $37 million in bonds to pay
for improvements to the city's electrical system as it prepares for
deregulation.
The City Council will decide in late December whether to approve the
bonds, and approval is expected.
The bonds will be repaid with revenues from electric rates, which are
not expected to increase, said Bernie Palk, the executive director of
Glendale Water & Power. In July, Glendale paid off $20 million in bonds
issued 25 years ago for electrical system improvements.
"It is like paying off a mortgage. If you refinance your house at the
same level, it will not impact your budget because you are used to paying
that much," said Bill Hall, the city's electrical services administrator.
The city is opting to use bonds to finance transmission and
distribution projects so it can use a portion of $70 million in reserves
to pay off $90 million in debt for out-of-state power plants in New
Mexico, Utah and Arizona and supplies in the Pacific Northwest.
Glendale Water & Power is trying to pay off that investment in power
plants to reduce its cost of power so it can be competitive when the city
opens its borders to private electric companies.
"This will help free up money in our reserves," Hall said. "Our
typical approach has been to use our cash."
Glendale Mayor Ginger Bremberg said it makes sense to pay off the
power plant debt because it was financed at higher interest rates than
would be paid on the $37 million bond issue.
The city has mapped out $32.2 million in expenses to improve its
electrical system over the next three years.
There is $10.6 million for replacing power lines above and below the
ground. Another $5.8 million will be used for expansion of the Air Way
receiving station, where the addition of a transformer and transmission
lines will improve the capacity to import power from the outside, Hall
said.
"This last summer we were in a tight situation. One of our two
transformers was being repaired. That puts a squeeze on your capacity. It
is like having an extra spare tire in your car," Hall said.
