e The Times-News, Nephi, Utah

 

 


96 South Main Street, PO Box 77, Nephi, Utah 84648 - Voice: 435 623-0525 - FAX: 435 623-4735
On our front page this week
May 11, 2022

 

  • Nephi City receives funding help from UMPA for construction of transmission line

By Myrna Trauntvein
TN Correspondent

The plan is that UMPA (Utah Municipal Power Agency) will help Nephi in the funding for construction of an electrical transmission line.

The key function of a transmission line is to transfer bulk power between generation sources and load centers.

“In the work session last week, the staff discussed the option of having UMPA post a security deposit to Pacificorp on behalf of Nephi City for the Electrical Transmission Line project,” said Seth Atkinson, city administrator.

The UMPA board approved this action in their meeting last week, he said.

UMPA sent the agreement for the city’s consideration in order to have this security deposit made on behalf of Nephi City by UMPA and the agreement has set forth certain conditions.

Atkinson said that the move would be a great benefit to the city.

When a project of this type was put out for bond, it was more difficult to get public offerings. UMPA had made it possible to get the needed work done and add the redundant source.

“Basically, the city agrees to reimburse UMPA if the project does not move forward, plus any interest costs,” said Atkinson.

It also obligates the city to pay $790,000 toward a southern redundant electrical connection. The southern redundant electrical connection has been part of the proposed electrical transmission line project and is a cost that had been anticipated.

By having UMPA post the security deposit, it absolves the city from obtaining an additional $6,540,000 in project expenses.

“It benefits UMPA in that they will earn a higher interest rate than their traditional portfolio investments but does make the cash less liquid,” said Atkinson.

He said that the staff recommended authorizing the mayor to sign the indemnification agreement with UMPA.

Atkinson said that there was an attachment of the indemnification agreement with UMPA on each council member’s computer for the council to review prior to voting to give approval.

UMPA is a Utah inter-local entity organized to provide wholesale electrical power to it’s members, all of which are Utah municipalities, including Nephi.

“Nephi’s electrical system is in need of a second point of delivery (POD) from PacifiCorp, which provides electrical transmission to allow Nephi’s power to be delivered to the city, in order to meet the electrical demands caused by growth,” said Atkinson.

UMPA has the ability to negotiate that POD with PacifiCorp to obtain the necessary POD, and has an obligation to its members to provide all requirements for its members to receive their electrical needs.

UMPA has entered into a contract with PacifiCorp for the construction of the facilities needed to provide a second POD for Nephi and UMPA is required to provide a cash deposit to PacifiCorp for Network Upgrade Costs in a minimum amount of $6,540,000, which PacifiCorp will place in an interest bearing account.

Having a redundant power source was much like the redundant natural gas source the city was now able to provide for its customers.

“This is similar to what we did with natural gas,” said Atkinson. “If something went wrong, we would have backup.”

Under terms of the agreement, UMPA will pay, on behalf of Nephi, $6,540,000 to PacifiCorp, or such larger amount as determined by the contract between UMPA and PacifiCorp.

In the event the full amount of the deposit is not refunded to UMPA for whatever reason, upon the completion or stoppage of the project, Nephi will pay to UMPA any sums not refunded, together with the interest it would have accrued while on deposit with PacifiCorp.

“Kasey Wright, city attorney, and I went over the agreement,” said Atkinson.

In addition to the indemnification for any deposit losses, Nephi further agrees to indemnify UMPA for any losses, injuries, damages, or other matters which create a liability to UMPA arising from the contract.

Nephi further agrees to indemnify UMPA for legal fees, expert witness fees and other costs arising from any costs incurred by UMPA in defending itself from any proceedings related to the contract.

Nephi will pay to UMPA for delivery to PacifiCorp the sum of $790,000 representing the Direct Assignment Facilities or those are facilities that benefit only Nephi in the POD project.

Nephi is required to perform any work, allow access to any facilities and otherwise fully cooperate with PacifiCorp in the construction of the facilities needed to make the POD.

“We have talked about this in work session and I feel comfortable in making a motion to authorize Mayor Justin Seely to sign the agreement,” said Memmott.

He then made the motion and Skip Worwood, council member, made the second and all voted in favor.

Layne Burningham, UMPA President & CEO, and Justin Seely, Nephi City Mayor, will both sign the agreement.