Power to the Plant: Funding on the way (Part 3 of 4)
Kaz Alvarez / Sun Star Reporter
April 20, 2014
The Alaska Senate concurred unanimously with Senate Bill
No. 218, sent to them through the Alaska House, to fund a new combined heat and power plant at the University of Alaska Fairbanks.
The plan to fund is composed of a hodgepodge of solutions. UAF intends to contribute $50 million through its own financing ability with the intent to make payments on that debt with savings realized through reduced fuel costs.
The new plant will have coal-fired boilers that pulverize the coal, increasing its surface area. The new boilers will be able to burn at a lower temperature, use less coal and produce fewer emissions. The current plant brings in 200 tons of coal, at about $14,000, per day.
Other funding was secured through “Alaska Statute 14.40.254,” which allows UAF to borrow more in bonds. The statute authorizes the issuance of bonds totaling $70 million provided that the University of Alaska secures payment of these bonds through a collection of fees, charges or rentals pledged to that purpose.
It is “the intent of the legislature that the University of Alaska implement a utility surcharge or increase tuition in an amount not to exceed annual revenue of $2,000,000,” according to the working draft of the Capital Budget, SB 119.
Additional bonds will be issued through section five of “Alaska Statute 14.40.040 General powers and duties of the University” to provide $87.5 million in bonds for the construction of the new facility. UAF will be taking on debt through the Alaska Municipal Bond Bank Authority to procure those bonds.
This bill will take effect at 12:01 a.m. the day after it has been signed by Governor Sean Parnell.
If you are doing the math now, you might notice that the total funding secured is $207 million. This is $38 million short of what is needed to build the new plant. Section 46 of the capital budget allocates funds not to exceed $50 million from the Alaska Industrial Development and Export Authority’s Sustainable Energy Transmission and Supply Development Fund.
In pulling these funds together, UAF will not receive state funding for deferred maintenance and reduced funding to complete the UAF engineering building addition.