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Council approves equipment contracts for substation upgrades, authorizes grant application for construction
Summary
Council accepted low bids for transformers and switch gear, voted to seek competitive bids on additional substation improvements and authorized staff to apply for a state match grant (up to $1 million) to reduce bonding needs.
Granite Falls City Council approved contracts for the lowest bids on transformer and switch gear equipment and authorized staff to seek a state matching grant for construction costs during its meeting.
City staff presented bids for two transformers and switch gear: five bids were received for transformers with the lowest from Virginia Transformer and three bids for switch gear with the lowest from Power Supply, the staff member said. Equipment lead time is about 62 weeks, so staff recommended delaying bidding the construction portion until 2026 while pursuing firm cost estimates from local contractors.
The matter matters to ratepayers because staff outlined a financing plan that relies on a combination of federal funding, a state grant and internal reserves. According to staff, the project has $2.353 million in federal funding and a $250,000 state grant already identified; staff recommended using $1 million of reserves and bonding for the remainder, with contingency, as a conservative worst-case bond of roughly $2 million. A financial analysis prepared for the council showed a potential 3% electricity rate increase in 2026 and another 3% in 2027 under the recommended bonding scenario.
Staff also said the Department of Commerce has opened a process to match federal grants and that the city can apply to match construction costs (equipment was not eligible because bidding and award are underway). “The max you can apply for that grant is a million dollars. I would like to move forward and apply for that grant for the million dollars to match the federal grant,” the staff member said, asking council to authorize work with the regional development council (RDC) to prepare the application and to contract with the RDC for writing assistance (estimated RDC fee $5,000–$10,000).
Council members questioned reserve use and bond sizing; staff stressed that keeping adequate reserves supports bond ratings and provides flexibility for unanticipated capital needs such as the hydro plant repairs and other emergencies. After discussion, a council member moved, another seconded, and the council approved three related motions by voice vote: to accept the low equipment bids and enter contracts; to call for bids for additional substation improvement items (alternates); and to authorize application for the state matching grant and RDC support. Vote tallies were conducted by voice and were recorded in the minutes as in favor or opposed, without roll-call tallies.
Council directed staff to continue work on final contract language (city legal staff and Spencer will review vendor contract terms), firm up construction cost estimates with local contractors, and pursue the state grant application with the RDC. If awarded, the state match would reduce the amount the city needs to bond or draw from reserves.
Next steps: staff will finalize equipment contracts, obtain competitive bids for construction when ready (anticipated 2026 for the construction bid package), and return to council with final project costs and formal financing recommendations.
