CLARKSVILLE, TN (CLARKSVILLE NOW) – To keep up with the continuous growth of Clarksville, CDE Lightband’s resolution to borrow money to pay for growth-related expenses was approved by the City Council unanimously on Thursday. The debt will be paid for with a corresponding 1% electricity rate hike.
CDE Lightband General Manager Brian Taylor said the bond issue is going to cost an additional $1.8 million, and to pay for that, they are looking at incorporating about a 1% electric rate increase. Taylor said that’s one option, while another would be to try and pay for the costs out of revenue, with a 17% rate increase.
“While we never take raising rates lightly, a modest increase of approximately 1% is necessary in October for our upcoming debt payment of $1.8 million to cover a new bond issue,” Taylor previously told Clarksville Now. “The bond proceeds will allow us to continue our crucial growth initiatives. This includes the construction of two additional substations, system improvements to handle Clarksville’s growth, and further enhancements to the resilience of our electric distribution system through smart grid technology.
“Issuing a bond will allow us to fund these essential capital projects, preventing a far more significant rate increase of around 17%,” Taylor said.
In the past, they’d been able to build substations out of ongoing revenue and existing cash. However, that revenue is no longer keeping up with expenses, Taylor said.
He also said last week that his agency will be refunding their 2015 bond series to save more than $1 million. The resolution authorizes the issuance and sale of electric system revenue bonds not to exceed about $47 million.
Strictly electric usage
Taylor said most of CDE’s equipment has a 30-40-year lifetime, so by doing the bond issue, the people that are using the product will be the ones paying for it. “Rather than the customers today paying for products they’ll use 30 years down the road,” he previously said.
Taylor said the 1% increase will strictly be on electric usage, not broadband nor internet, and it’s expected for the increase to go into effect in October, after a study, getting approval from CDE’s board, as well as the TVA.
Clarification: The Council approved CDE borrowing the money. CDE said that with that approval, they will offset the debt with a 1% rate increase.
| MORE: CDE Lightband requests to borrow money, raise electricity rate 1% to pay for growth-related upgrades