The Board of Directors for Tennessee public power utility EPB on Oct. 20 approved a $125 million bond issuance.
“Funds raised will be devoted to capital improvements to further enhance the reliability and resilience of the local electric system for customers while accommodating the cost of building out new infrastructure to support rapid growth in the Chattanooga area,” EPB said.
EPB expects funds raised through the bond issue to be used for a range of operational needs to serve customers:
- Growth: Additional capital investments in power infrastructure are needed to respond to significant growth in EPB’s service territory. New residential premises served by EPB are projected to more than double in 2024 compared to 2014, with significant increases in the cost of material and equipment required to serve them.
- Reliability: Neighborhoods on the edge of EPB’s service area may not be served through redundant power lines due to their location. New resources will be deployed to increase reliability in these neighborhoods.
The bond issue will be presented to the Chattanooga City Council at an upcoming meeting, which will have final approval before the bond is issued officially by the city.
Although the city is responsible for issuing bonds on EPB’s behalf, the debt is secured by EPB revenues and remains completely separate from city finances.
“Issuing bonds will help EPB spread out the cost of needed capital investments that will serve customers over the next several decades. This is a standard practice for many utilities across the country because it means current customers pay only for the cost of the power infrastructure in place today and are not responsible for bearing the costs of improvements that don’t benefit them directly,” said EPB Executive Vice President CFO Greg Eaves. “Our focus remains on providing reliable energy services. Building out resources is an essential part of that commitment.”
EPB maintains strong bond ratings from previous issuances, including AA+ from Fitch Ratings and an Aa1 rating from Moody’s Investor Service at the time of EPB’s last bond issue in 2021.