“I am asking the commission that even if we are in the fortunate position of being able to fund the pipeline with grant money, we be able to use the money allocated from the rate for the pipeline for other [federal] stipulated order projects,” Warren said in his amended direct testimony to the Commonwealth Public Utilities Commission.
The replacement of pipeline that permits CUC to take oil from its supplier to Power Plant 1 is the “highest priority item for completion at present,” Warren said.
CPUC has approved the funding request of $2.45 million for the pipeline replacement.
Last month, Warren filed his amended testimony that included the “bridge funding” request amounting to $2.65 million.
According to Wikipedia, bridge funding is “a method of financing, used to maintain liquidity while waiting for an anticipated and reasonably expected inflow of cash.”
Warren said CUC also has to consider other stipulated order projects such as the computer system and the acquisition of heavy equipment.
Those projects cost about $2 million, he added.
CUC’s immediate priority projects are the replacement of the pipeline, the remediation of Power Plants 1 and 2 and the acquisition of another tank to store oil from Tank 104.
“We have decided…to ask only for the underlying funding for the pipeline at this time. This is because of two issues we have encountered,” Warren said.
First, he said, CUC does not have full engineering cost estimates for a number of stipulated order projects.
But CUC has already engaged a local consulting firm and tapped one of its in-house engineers to begin the cost estimation, he said.
Second, CUC’s rate consultant Economists.com has advised that the utilities corporation cannot make a request at present for underlying funding.
“They have set forward why we must seek long-term financing and ask only for the debt financing in this petition,” Warren said.
Warren said the U.S. Environmental Protection Agency required CUC to undertake about $16 million of capital projects, which include the replacement of a pipeline.
He said CUC has been able to secure only a $4.05 million grant for some of these projects and the money is “now essentially exhausted.”
“We expect to be receiving another $800,000 from another grant which we can use…but this will not be provided until after the federal continuing resolution is over,” he said.
He said the huge concern for CUC is to be able to show the federal court and the EPA that the utilities corporation is consistently trying to obtain funding to perform the mandated projects.
“Because of this obligation, we believed we needed to do everything possible, including asking the commission for the underlying funding, to get the funds to perform these projects,” he added.
In Nov. 2008, the U.S. Department of Justice and the EPA signed and lodged two stipulated orders to reform and bring into federal compliance CUC wastewater plants and collection systems, public drinking water systems, five power plants and an oil transfer pipeline.
