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Special City Council and ERMU Commission Page 2 <br />June 15, 2Q09 <br />o Costs & Financing <br />~. Davis, with R.~J, Beck, provided an evaluation of projected power supply costs for <br />various power supply alternatives under multiple market condition scenarios. He reviewed <br />current power supply arrangements and resources. Four power supply alternatives were <br />discussed. <br />Mr. Davis was asked to outline some of tlae risks for the city to become a co~owner. <br />Those risks included; <br />~ Possible Cot charge <br />Loss of Load <br />~ Madelings ~scenarios~ were very conservative <br />Project becomes a "no-go" vote on September 11 by current co-owners <br />Possible ~3 million loss if there is no closing <br />interest rates and capital cost runs. <br />® Fuel costs <br />Performance at the plant <br />Project incompletion or delay <br />Financing <br />Ms. Johnson asked for an explanation o£ the financing for this project. <br />Mr. Schulte outlined the following casts to the city for the Big Stone Zl project with 30 <br />megawatt ~ of a 500 Mw plant and a 2015 in-service date. <br />~ Total capital cost; 9G million <br />Estimated onetime catchup payment; X2.6 million <br />Estimated ongoing monthly payments; X51,000 <br />Mr, Schulte stated by .fall 200 all co-owners must have their f nancing for the project in <br />place at the financial close. Ells River would need to finance ~9Q~110 million if they want 30 <br />megawatts. <br />Two options were outlined; <br />Ells River could bring its own money to the table by marketing its own bonds. <br />CMMI'A could raise the money for the cit~r for its share based on a contract tlae city <br />would need to sign as collateral. CMMPA sells bonds in the marketplace to raise the <br />money. <br />Mr. Becl~ noted tl~e city would most likely have to use CMMPA and the bands would be <br />revenue bonds. The interest rate would only be valid until 2010 then ERMU would be <br />responsible for tlae X90-110 ix~illi.on debt. <br />M~~. Zerhinger stated this would equate to 2.7 cents per kilowatt hours. <br />It was noted that there would be no payments between the Financial close date and the in- <br />service date. Users of the facility would end up paying the interest and costs. Tlae benefit <br />goes to the user who is paying for it. <br />