EPB is flush with $219.8 million to spend on an upgrade of an electric system that would form the backbone of the fiber-to-the-home service.

The utility on Tuesday closed on the bond issue that its board of directors approved April 23, said EPB spokeswoman Lacie Newton.

“The funds are in the bank,” she said.

EPB will start spending the funds immediately to upgrade the electric system, Ms. Newton said.

A detailed spending plan will be created during a board meeting on May 16, she said, when the panel starts looking at the 2008-2009 fiscal year budget. The next fiscal year starts July 1.

The bonds were issued with a 4.64 percent interest rate, Ms. Newton said, for a term of 25 years. EPB initially had expected to pay 5 percent interest on the loan.

The smart grid will be an upgrade of fiber-optic lines and electronic equipment that will allow EPB to better monitor and control its electric grid, officials have said.

The smart grid also would allow EPB to use smart meters, which would help customers conserve electricity and save money, they said.

The smart grid fiber-optics also could form a component of EPB’s planned telecommunications service called fiber to the home, which would provide cable television, high-speed Internet and telephone service to residential electric customers.

EPB officials have said that cable TV and other services could be offered to some residents by the end of this year.

Comcast of the South filed a lawsuit April 22 in Hamilton County Chancery Court to block fiber to the home, which Comcast says violates state law.

The Tennessee Cable Act does not allow public utilities to use electric revenue to guarantee telecommunications ventures, according to the lawsuit.

EPB plans to issue a loan from the electric system to launch fiber to the home and later repay the electric system, officials have said.

EPB President Harold DePriest said last week the loan could take a couple months to be completed, and the board would have to approve the loan.

The lawsuit was assigned last week to Hamilton County Chancellor Frank Brown, and Comcast is awaiting a court date, said Valerie Gillespie, vice president and general manager of Comcast.