The city’s municipal light and power fund is getting a boost of about $1.4 million.
That’s the amount the city overpaid for the 115kv transmission project completed in partnership with Tri-State Generation & Transmission and Delta-Montrose Electric Association.
When the contract was signed in 2005, the City of Delta committed to a “ceiling” of $3,750,000.
But right-of-way acquisitions, changing construction costs and lighting issues at the airport caused actual construction costs to exceed project estimates.
“The project was finally completed around the end of 2013 with Delta paying $5,148,781 in total to the project,” said utilities director Steve Glammeyer.
“So when the books were finally closed, we had overpaid $1,398,781,” Glammeyer said.
The construction contract contained a provision to remedy overpayment, Glammeyer explained. “The first remedy is for Delta to simply agree to have overpaid and accept one-third ownership,” he said. “The second option allows Tri-State and DMEA to ‘step up’ ownership in the project and buy back Delta’s amount of overpayment. Delta would see a reduction in ownership of the transmission line.”
Glammeyer said city staff spent a lot of time looking at load projections over the next 20 years and determined the City of Delta does not need all the capacity in the line it paid for. They recommended the city exercise the buy-back provision.
Reduced capacity is not a concern, Glammeyer said, because the city’s wholesale power provider, Municipal Energy Agency of Nebraska, is required to deliver electricity to the city’s two metering points.
“No matter what happens we’ll always have power delivered to us, although we may pay transmission costs [for a tiny piece of the journey],” Glammeyer said.
With the municipal light and power fund in a stronger financial position, Glammeyer said it will be possible to continue purchasing service territory from Delta-Montrose Electric Association and potentially “stave off” future rate increases.