City takes the next step toward solar park
By Lynn R. Parks
A public referendum on the city's plan to borrow nearly $1.66 million to build a solar park will be held Monday, Sept. 28.
The city council OK'd the date at Tuesday night's meeting, following a public hearing on the proposal.
The $1.658 million loan would come from the state, which has agreed to forgive nearly a third, $500,000, once the project is completed. The city would pay back $1.158 million, with a 2-percent interest rate. Payoff period would be 20 years.
The 474-kilowatt solar park would be built on two acres next to the city utility building on Herring Run Road. Assistant city manager Charles Anderson told the council that in its first year of operation, it would generate about $119,000 in revenue. After expenses, including payment on the debt, about $40,000 of that would be profit.
More than half of the expected revenue, $62,000, would come from purchases of the solar park's power by the Delaware Municipal Electric Corporation, the city's power provider. Under state law, a certain portion of that corporation's power has to be green, or generated without using fossil fuels. Other city members of DEMEC, including Dover, Middletown, Milford and Newark, already have solar plants.
The city has negotiated a 20-year contract with DEMEC for the purchase of the solar-generated power.
The remaining revenue, $57,000, would come in utility savings. The solar plant would provide about half of the power that is used by the city's wastewater treatment plant.
Only one citizen spoke at Tuesday night's public hearing. Dan Cannon said that he supports the project.
I would really like to vote yes, he said. But he would like to have a commitment from the city that the project will result in lower water and sewer rates for residents.
This project would save our city some wastewater treatment power costs as well as help meet some of ourobligation for green energy production, Cannon said. Both would be of benefit to Seaford taxpayers. But we customers and taxpayers deserve to enjoy a direct benefit from our 'yes' votes. We need to share some of the savings from the solar array project by lowering our water/sewer charges.
Speaking by phone Wednesday morning, Anderson said that the city can't promise that water and sewer rates will go down.
Electrical cost at the power plant is just one of several factors that influence rates to the consumer.
If everything was static, then yes, we could say that lower power costs will mean lower bills, he said. But other factors, including the cost of chemicals to treat the wastewater, could go up as the power bill goes down.
Power costs are one facet of operating costs at the treatment plant, Anderson said. We are trying to keep them all as low as we can.
What the solar park will do, Anderson said, is help to keep power costs at the treatment plant steady. We believe that over the 20-year period of this loan, the electric rates will go up, he said. This will help to offset those increases.
During the public hearing, Cannon also urged the city to reduce the amount that it has to borrow by putting some of its own money into the project.
And he said that what he called the debt restructuring, when the state forgives $500,000 of the loan, should result in additional savings to consumers.
But city manager Dolores Slatcher responded that the debt will not be restructured at the completion of the project.
The procedure right from the beginning takes into account the $500,000 forgiveness.
The city is required by its charter to ask the public's permission to borrow more than $2 million. But Mayor David Genshaw has said that that it is important, when spending this kind of money, to have public support.
The last time that the city held a public referendum on a borrowing plan was in 2012, when it asked the public to approve a $1.9 million loan for installation of water meters. Voters turned the city down by a vote of 87 to 45.
For your information:
A referendum on the city of Seaford's plan to build a solar park will be Monday, Sept. 28, in city hall. Voting will take place from 2 to 6 p.m. For details, call the city, 629-9173.
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