Power plant bonds to be bid at online auction

August 15, 2002|by STACEY DANZUSO

CHAMBERSBURG, Pa. - The Borough of Chambersburg will pay for a multimillion dollar power plant with two $10 million bond issues, the first of which will go to bid in an online auction later this month.

On Tuesday, borough council members approved a resolution allowing the borough to spend money from the electric department reserves and the self-insurance fund to cover any payments it must make to Wartsila for the four diesel engines before it receives the profits from the bond issue. That will probably take six weeks from the Aug. 27 auction, Borough Manager Eric Oyer said.

"This puts us in the position to spend money and eventually reimburse ourselves," he said.

Last month, council members threw their support behind the ambitious project, which involves building a new power plant on five acres in the Chambers-5 Business Park in the south end of Chambersburg.


By issuing two smaller bonds instead of one $20 million bond, the borough should get a better rate and will be eligible to refinance the bonds more times over the life of the issue, Oyer said.

The council has finalized a contract with Wartsila for four diesel engines, and it is close to signing a power supply agreement with the help of consultants from Downes and Associates, Inc.

The additional 20 to 25 megawatts of electrical generation will improve reliability for borough electric customers, protect against future price spikes and provide local control, Oyer said.

The consultants have been studying various options for more than a year and determined the most economical option was for the borough to build its own facility.

With the new facility, the borough will save $1.6 million annually. After a debt service of $1.2 million, the borough will see a net savings of $400,000 a year, consultant George Owens said last month.

The borough will pay off the bonds over 20 years, after which the power plant should still be operational for another 30 years, according to Oyer.

The new facility will add to the 7.5 megawatt generation capacity the borough currently has to cover the need generated during peak times, like hot summer days. The proposed station would cover the variable usage on any given day, allowing the borough to enter into a wholesale power agreement to purchase just its basic power load.

The new power plant could be up and running by June 2003.

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