|Twin City Power's fate left to voters|
BY PATRICE ST. GERMAIN|
Voters in Hildale will have something extra on the November election ballot concerning bond indebtedness, which stems from the Twin City Power Company.
The company, which distributes electricity to the Hildale and Colorado City areas and was once a producer of power, is in default on bonds, in excess of $19 million, issued to build the system, which became operational in 1997.
The ballot question is asking voters if the city should be authorized to sell or transfer electrical distribution and power assets issued in 1995 and 1997 in exchange for relief of bond indebtedness from the trustee, bondholders and/or Wells Fargo Bank.
Hildale business manager Jerry Barlow is hoping to have a large turnout at the election.
"It is important we get as high a turnout as possible so we have a good view of what the community is deciding," Barlow said.
Selling off the power company that hasn't generated its own electricity since 2005 and now purchases power through UAMPS (Utah Associated Municipal Power Systems) would ultimately lead to some relief for residents who pay 12.5 cents per kilowatt hour for electricity.
According to the Rocky Mountain Power Web site, customers in Utah pay less than 8 cents per kilowatt hour and the national average is listed at 10.08 cents per kilowatt hour.
About 35 percent of the Twin City Power users are in arrears on payments, Barlow said, which is about 15 percent lower than the two years when about 50 percent of the customers were behind on payments.
Barlow said since the company began providing prepaid meters, it has helped with the percentage of customers overdue on power bills.
If the voters in the community opt to sell off the power company assets, Garkane Energy Cooperative, the former power provider for the twin cities, is prepared to step in and, once again, provide power to those communities.
Carl Albrecht, CEO of Garkane Energy, said the vote is the first step needed in taking over the power system.
If the voters decide to get rid of the power company, Albrecht said a memorandum of understanding, with a deadline of June 30, 2009, will have to be agreed upon and the sale would be negotiated not just with the city and Garkane but with the bond holders.
If the sale takes place, Albrecht said it could result in some reduction of power rates although not the same rate as other customers on the system, which is part of the Deseret Power Electric Cooperative, because of the investment Garkane will have to make.
The residential rate for Garkane customers is 6.5 cents per kilowatt hour for the first 1,000 hours and 4.5 cents after 1,000 hours.
Garkane provided power to the twin cities until the early 1990s when the communities threatened to condemn the distribution system and duplicate it, something Albrecht said could have happened under Arizona law.
Twin City Power started distributing power to the residents in 1994 and started the power generation plant in early 1997.
In addition to Hildale, Colorado City also has to vote on the issue since both communities are tied to the power company.
Albrecht said Garkane was approached by the bondholders about running the Twin City power system which Barlow said ran into trouble after the natural gas contracts ran out and gas prices skyrocketed.
"It (the power plant) is too expensive to run in the market today with gas prices quadrupling," Barlow said. "Basically, that put us out of the ability to run and operate the system and we were not able to maintain our obligations and commitments and the bonds went into default."
If the communities are able to get out of the power business, the cities will have a long road ahead to solve the default problem and show that the municipalities are a good risk as far as borrowing money.
The city also had general revenue bonds which were voted on by the community and were repaid by a property tax increase.
Barlow said the communities had decided to run a power system which would give the communities a certain amount of independence since it was locally owned and boost the economy by providing local jobs.
Originally published October 6, 2008
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