News Column

City Council approves funding to replace old substation

February 11, 2014

By Sharon Myers, The Dispatch, Lexington, N.C.



Feb. 11--The substation, known as the Old Hospital Substation, was identified in the 2012 Electric System Coordination Study, conducted by Southeastern Engineering Consultants, as a priority project. Although the utilities staff has made numerous repairs to this unit, the transformer has surpassed its 25 years of useful life. According to the study, in order to maintain the reliability and integrity of the city electric system, a new transformer as well as a new metal-clad switchgear need to be installed.

The cost for the new 20/27 MVA transformer is approximately $650,000, and the cost for the new metal-clad switchgear is approximately $582,000, for a combined total of $1,232,000. City engineers and staff also recommend purchasing the same type switchgear for Royal Park Substation as well at an estimated cost of $572,000. The total estimated cost for these two substations is $1,804,000.

The city electric department has stressed the need to proceed quickly with the Old Hospital Substation due to the long delivery time for the transformer. John Overton, finance director for the City of Lexington, said the initial temporary funding will come from a combination of remaining unspent funds from the Cotton Grove 44kV Loop and Wallburg Substation Transformer projects as well as from the Capital Reserve Fund.

The Cotton Grove 44 kV Loop project in July, 2011 was budgeted for $550,000, but was completed at a total cost of $482,070.87, leaving a remaining balance of $67,929. In July, 2012, the Wallburg Substation Transformer project was established at $650,000, but was completed for a total cost of $469,934; leaving a remaining balance of $180,065. These projects' remaining balances, along with $984,005 in the Capital Reserve Fund will be used and transferred for the initial temporary funding of the Old Hospital Substation.

"The ordinance is to provide advanced funding for the project before we issue debt financing later on to pay ourselves back," Overton said. "We need to set up this ordinance so we can begin work."

Debt financing of this project is anticipated in the summer or fall of 2014. Once debt is issued, the entire $1,232,000 will be transferred back into the Capital Reserve Fund for future electric capital needs.

In connection to this project, the Lexington City Council approved to accept the bid from Virginia Transformer Corp. of Roanoke, Va., at a total contract price of $475,389 for a new 20/27 power transformer with load tap changer.

Also during its meeting, the city council approved the fourth year of its contract with Martin Starnes & Associates CPAs at the amount of $33,150. In 2010, the city council approved a five-year audit contract commitment with Martin Starnes & Associates CPAs, PA, for fiscal years ending June 30, 2011 through June 30, 2015. The five-year term is not contractual and each year is subject to renewal and negotiation. Overton recommended the city council should approve the fourth-year contract with Martin Starnes & Associates and authorize the mayor to execute the formal audit contract.

"We have been very satisfied with their work and recommend approving this year's contract," Overton said.

In other business, the city council continued to make appointments to various boards and commissions. Pam Crump was named as the Ward 5 representative for the Lexington Appearance Commission and Antonio Threadgill was named to the Lexington Recreation and Parks Advisory Board.

Sharon Myers can be reached at 249-3981, ext, 228 or at sharon.myers@the-dispatch.com. Follow Sharon on Twitter: @LexDisptachSM

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Source: Dispatch, The (Lexington, NC)


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