Dan V. Jackson, Economist.com managing director, in his testimony to the Commonwealth Public Utilities Commission said they have aided dozens of municipalities in issuing long-term debt to fund utility capital improvement projects.
“In attempting to acquire long-term debt, some of these communities went to state agencies, some went to federal agencies, some utilized multinational agencies and others went to the open market,” he said.
Those communities, he said, were required to present a long-term financial plan that showed they had the ability to service the proposed debt and to meet a reasonable debt coverage requirement.
CUC financial chief officer Charles Warren said they are looking for financing because the U.S. Environmental Protection Agency required them, under the federal stipulated orders, to undertake about $14 million of capital projects, including a $1.7 million replacement of the pipeline in Lower Base.
He said CUC was able to secure only $4 million of grants for those projects.
Jackson said CUC was able to identify its operating expenses for 2011 through an interim financial plan in March 2010 that was presented to EPA for review and approval.
“The annual cash flow forecasts are paramount to the lenders’ decisions — for the obvious reason they would not provide funding to the utility unless it could present evidence that it could service the debt,” he said.
Jackson said CUC’s interim financial plan indicated an $84,684,609 forecast in electric division operating expenses for fiscal year 2011.
The most significant expense is fuel, he said, which amounts to $59,964,308.
