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Chattanooga: EPB tries to wrap up bond issue

By: Jason Reynolds
(Contact)

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Harold DePriest

EPB is trying once again to finalize financing to add a high-tech component to its electric system that would form the backbone of its fiber-to-the-home plan.

“We expect to price the bonds early next week,” said Harold DePriest, EPB’s chief executive. “People will tell us what they’re willing to pay and our board will determine if they’re willing to take that.”

The utility is soliciting offers in the financial markets for up to $230 million in bonds to build the smart grid, a fiber-optic enhancement to the electric network, as well as buy other electric equipment. EPB’s board is to approve the bonds at 3 p.m. Tuesday, but the timing could change depending on when the bonds are ready for approval, Mr. DePriest said.

A Davidson County chancellor on Monday threw out a cable industry lawsuit that was trying to block EPB from offering cable television, high-speed Internet and telephone service to residential customers.

The Tennessee Cable Telecommunications Association is reviewing its legal options, said Stacey B. Briggs, president and executive director.

“Any lawyer could tell you the judgment is not final until 30 days after it was handed down,” she said.

The cable association may appeal the chancellor’s decision or ask her to reconsider, Mrs. Briggs said, or may file a new suit in Hamilton County.

EPB officials have previously said the subprime mortgage crisis has made the bond financing market unstable, which has held up the smart grid’s financing.

However, the bond market has improved recently from just a month ago, said Chris Hopkins, vice president of Barnett & Co., an investment advisory firm. Creditors are returning to buy bonds, he said.

“The market has improved somewhat,” he said. “It’s too early to say it’s over, but there’s no question it’s improving.”

The rollout date for fiber to the home depends on EPB meeting a series of deadlines, Mr. DePriest said.

If the EPB board approves the bond issue Tuesday afternoon, he said, the utility could submit it for approval that evening to the City Council. The utility would receive the funds by mid-May, Mr. DePriest said.

If that timetable works, EPB could issue a loan in May from the electric system to buy equipment for the fiber-to-the-home plan. Construction would start in May, and the first customers could start receiving telecom service between November and January, Mr. DePriest said.

Out of the approximately $230 million bond issue, he said, $180 million would pay for fiber-optic lines and electronic controls for the first 80 percent of the smart grid in the most populated parts of EPB’s service area. The remaining 20 percent of the smart grid, in more rural areas, would come later.

The remainder of the bond issue would pay for normal electric equipment such as poles and transformers, he said.

EPB is still negotiating with content providers for cable television programming, Mr. DePriest said. Prices have not yet been set for telecommunications services.

WHAT’S NEXT

EPB’s board expects to approve financing for the smart grid next week, possibly when it meets Tuesday at 3 p.m. The City Council may sign off on the financing plan Tuesday night or the week after.