After receiving approval from the Board of Directors in August, the PUC is now seeking final authorization from their Shareholder, the City of Sault Ste. Marie, to borrow $15 million from Infrastructure Ontario to address Sault Ste. Marie’s aging electric utility infrastructure. As previously reported, borrowing provides the necessary leverage to complete capital works projects without increasing rates beyond what has already been announced or approved. This borrowing would occur over three years to replace some of the city’s aging electrical distribution system.
2015 will see the PUC continue an investment of $15 million in upgrades to the city’s electrical distribution grid including; replacing poles, switches and substations. “The PUC remains committed to continual improvement and investment in the city’s electrical distribution grid. We have been working to gradually increase the amount of infrastructure renewal we do each year. This investment in the electric distribution system will provide long-term tangible benefits for all PUC customers.” says PUC President, Dominic Parrella. “So far in 2014, equipment failure has accounted for seventy percent of the outages to-date. Investments like this will lead to a more reliable electrical system by reducing the occurrence of this type of outages,” says Parrella.
The PUC will also be seeking approval from the City in the new year to borrow $8 million from Infrastructure Ontario for the water utility. These funds will provide the working capital required to implement the Water Quality Improvement Project, specifically, the installation of the advanced treatment methods and the construction of new wells to replace the lost capacity of the Lorna Wells. The funds will also help cover the 2014 budget short fall resulting from the abnormal amount of watermain breaks and frozen service lines that Sault Ste. Marie experienced this past winter. The winter of 2013/2014 was the second worst winter (with regard to amount of main breaks) Sault Ste. Marie has experienced in its recorded history. 2014’s extreme temperatures resulted in a total of 245 frozen water services and over 171 watermain breaks, compared to 73 watermain breaks in the winter of 2012/2013.
“We know customers are concerned about rates.” says Terry Greco, Vice President of Finance. “We want to assure our customers that borrowing in this manner is the least impactive way to attain the required level of capital required to complete the necessary infrastructure improvement projects.”
“This borrowing will not result in any new or unplanned rate increases because the investment in the water system falls within the previously announced yearly rate increases identified in PUC’s Financial Plan that was submitted to the Province in 2012. Similarly, the investment in the electric system falls within the current distribution rates approved by the Ontario Energy Board,” said, Greco.