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Independence council approves $13.56 million EPC contract for Bly Road switchyard; IPL says project repaid from capacity payments
Summary
The council approved Ordinance 26-032 to fund a $13,561,176 EPC contract for a Bly Road switchyard, with IPL director Joe Hegendefer saying contractual capacity payments from the large new load will begin in October 2026 and will repay the project within six months of those payments.
The Independence City Council on May 4 approved Ordinance 26-032 authorizing a $13,561,176 engineering-procure-construct (EPC) agreement for a new Bly Road switchyard and appropriating $14,917,293.60 from Independence Power & Light (IPL) reserve funds to complete the project.
Assistant City Manager and IPL officials told the council the funds will come from IPL’s enterprise reserve and will not be mixed with the city’s general fund. "This is coming 100% out of the Independence Power and Light reserve funds on the enterprise funds," IPL Director Joe Hegendefer said. "We have adequate resources in that piggy bank to be able to do these without impacting rates."
Hegendefer said the large new customer is contractually obligated to begin making capacity payments starting in October 2026, regardless of whether the facility is producing or withdrawing energy, and those payments will refund the EPC dollars. "All of these dollars specifically will be repaid within 6 months of starting that," he said. Councilmembers followed with questions about the contract term and potential excess revenue beyond repayment; Hegendefer said capacity payments run from October 2026 to October 2027 and could generate net revenues beyond project payback.
Council members pressed how the revenue could be used. Hegendefer and City Manager Anderson said the city could reinvest excess net revenue in community programs previously curtailed for budget reasons, including energy audits, LIHEAP-related assistance and other resident-facing services. Hegendefer said early estimates for the coming fiscal year equate to roughly $3.5 million in capacity-payment revenue flowing to the general fund tied to the new load.
The ordinance passed on second reading with a roll-call vote of 7-0.
Next steps: the city manager is authorized to execute the EPC agreement and to approve change orders up to the limits set in the ordinance; council retained oversight through the appropriations and roll call.
