The Lakeland City Commission on Monday will vote on whether to issue a $70 million bond to help cover the costs of repairing a damaged Lakeland Electric power plant unit, along with necessary upgrades to the entire system.
In mid-April, City Manager Shawn Sherrouse sent city commissioners an email and memo, saying he needed to authorize an “emergency purchase in excess of $21 million” for major repairs to Lakeland Electric’s McIntosh Power Plant Unit 5.
The natural gas-powered unit, which produced 64% of the utility’s electricity last year, lurched to a halt on Feb. 23 and has been out of commission ever since. But it wasn’t until March 31 that the full extent of the damage became clear. The price tag to fix it was locked in at $21 million.
The new bond will help cover those costs, as well as the costs of building a new power plant.
“We’re expending a lot of the existing energy revenue bond that we issued to make the repairs to Unit 5, so we’re going to issue another bond to cover the additional costs for the RICE project,” City Finance Manager Mike Brossart told commissioners at their Friday morning agenda study.
Lakeland Electric broke ground last year on a $155 million “next generation” power plant that will feature six 680,000-pound RICE (Reciprocating Internal Combustion Engine) generators. That plant is expected to become operational in fall 2024.
“This allows us to go ahead and begin to incur those expenses for the RICE unit, and also we’ll cover some of the additional capital improvements we intend to make to harden Unit 5 a little bit more,” Brossart said.
He told LkldNow that the $70 million contains a $21 million reimbursement for fixing Unit 5 and an additional $4 million for reassembling it.
“There are still the unknowns that could come up,” Brossart said.
There is an additional $45 million in case they run into any problems with the RICE engine.
“The $70 million is just a high threshold,” Brossart explained. “If we can get by with $60 million, that would be great. This just says, ‘Hey, IRS, if we spend up to $70 million, we’ve gotten this ordinance in place.”
The city commission meeting takes place Monday at 9 a.m. in its temporary location, the Lakeland Electric 1 A/B conference room.
SEND CORRECTIONS, questions, feedback or news tips: email@example.com