PDF: Cable Survey
Article: Dueling video
PDF: TCTA EPB Suit
Article: Public supports EPB fiber proposal
By Jason M. Reynolds
EPB still is studying options to finance its $219 million fiber-to-home initiative, the largest publicly backed project in Chattanooga history.
"If we move on the bond issue by December or January, we're pretty well on target," EPB President Harold DePriest said. "If we go much beyond the first of the year, it will be slowing us down."
The city-owned utility originally had planned in October to select a bond underwriter. Chief Financial Officer Greg Eaves said Friday that EPB is several weeks away from deciding on a finance package, but he hopes to present an offer to the board of directors in late December.
EPB expects to select a bid offer at the end of this year for a control system for the telecommunications system, Mr. DePriest said. Then the utility will need money to pay the vendor, he said.
The utility plans to begin offering video, telephone and high-speed Internet service to the first residential customers in fall 2008, with all its electric customers having the option to sign up by 2013.
Mr. Eaves said EPB received 11 finance offers from bond underwriters and had expected only a handful of proposals, which has slowed the process. EPB staff have narrowed the list to five underwriters and are running projections for seven scenarios based on market conditions, he said.
Fallout from the subprime lending crisis has made it harder to obtain bond financing, Mr. Eaves said. Normally, AAA is the highest bond rating for a utility, he said, with minus-BBB being the lowest rating.
In July the difference between the highest and lowest ratings was a one-quarter percentage point, and now the difference has shot up to 1 percentage point, he said.
Half a percentage point increase would equal about $1 million more per year in debt, Mr. DePriest said.
EPB, like most utilities, has a AA rating for its electric system debt, Mr. Eaves said.
"Our whole financial system is not doing particularly well in the subprime market," Mr. DePriest said.
Despite the bond financing delay, the utility's board of directors on Friday awarded two contracts totaling $3.6 million to install fiber-optic lines to monitor and control its substations. The utility already had set $12 million aside this year to install fiber optics for its electric system.
The fiber optics will allow EPB to monitor and better control the substations, including turning control breakers on and off, Mr. DePriest said. The fiber optics also will lay the groundwork for EPB to coordinate use of smart meters that can shut off homes' air conditioning and water heaters during peak times to save customers money and conserve electricity. And, the substation fibers will be connected to the fiber-to-home system, he said.
The $3.6 million will be split between Ervin Cable Construction and Fiber Technologies, which will install the fiber-optic lines, said David Wade, senior vice president of the electric system.
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EPB's board of directors may approve a bond issue in December for the fiber-to-home plan. A Davidson County chancellor will rule in two or three weeks on whether a lawsuit filed by the Tennessee Cable Telecommunications Association should be considered in Nashville or Chattanooga.