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Borough utility asks assembly to authorize bond for $8M standby diesel project after cost increases
Summary
Utility staff reported the standby diesel generator project now has an ~$8 million construction estimate; the utility has $5.4M committed and will ask the assembly to hire a bond attorney and place a bond ordinance before voters this fall to finance the gap.
Agency official (utility) told the assembly the diesel standby generator project would add about 3.5 megawatts of diesel capacity to local generation and is intended to provide n-minus-1 contingency coverage if hydro or transmission is lost. The project was studied in 2021 with an original estimate of roughly $4.5M; current construction estimates are near $8M, creating a funding gap despite prior equipment purchases and a $5.4M funding pool.
Utility staff said the assembly will be asked to approve hiring a bond attorney (consent agenda item) and that a bond ordinance will be drafted to go to voters this fall. The utility emphasized the generator is not intended for daily baseload but as backup during extended transmission outages caused by events such as cable failure or landslides; staff noted that commercial customers (for example, a proposed data center) would need contractual terms to curtail use or pay diesel costs to protect other ratepayers.
Assembly members asked how the project would affect rates and whether existing capacity is sufficient for incoming large customers. Utility staff said a rate study tool (WaterWorth) and capital planning are in place to smooth rate impacts and that selling more kilowatt-hours generally reduces per-unit costs; they also said contracts can be structured so that new customers are curtailed or pay the marginal diesel costs during constrained conditions.
Staff proposed several related design and feasibility studies (battery energy storage at the hydro, transformer replacement scenarios) and said meaningful federal and state grant opportunities exist that could reduce local cost share but are not guaranteed. The utility recommended moving forward with bond planning so the project can proceed if voter approval is secured.
