City of Seaford holds first of two hearings on new electrical substation
By Lynn R. Parks
Construction of a new electrical substation to replace two substations in the city of Seaford would cost about $9 million, according to a preliminary budget prepared by engineering firm Downes Associates. Payment for the project could mean an increase in city electric bills of between 2.3 percent and 3.3 percent over the life of the loan that the city would obtain to pay for the work.
For the average household, 2.3 percent equates to $3.06; 3.3 percent to $4.28.
The city held the first of two public hearings on the project last Thursday. George Owens, an electrical engineer and president of Downes Associates, said that the substation project is long overdue.
"This project will replace aged infrastructure that is critical to the electrical supply for the city," Owens said. It will also allow for anticipated growth in the city's use of power, because of new population and businesses as well as increased electrical usage by current residents.
The city plans to build the new substation near the site of its current Pine Street substation, on the S.C. Cummings and Sons Inc. property that the city bought in May 2015.The new station will have two transformers, one replacing the transformer at the Pine Street station and the other replacing the transformer at the city's Central substation. The Central substation, located next to the Nanticoke River near the site of the old city power plant, will be demolished.
The two new transformers will each have a capacity of 20 mega volt amps (MVA) (a measurement of "apparent power," or the total of useful power plus power that is wasted or lost through heat). The Pine Street transformer is 15 MVA. The Central is 10 MVA but "for years we have been taking it easy on that transformer because of the age of the equipment," Owens said.
The city's third transformer, at the Ross substation, is 20 MVA. That transformer, built in 1988, will remain as it is.
The new substation will have a new control building. The current building, cement block with a wooden roof, is "totally antiquated," Owens said. "It is absolutely imperative that we replace it."
The new building will be constructed in a factory specifically for this use. Doing that is less expensive than building something onsite and then trying to fit the components in it, Owens said.
The project would also include construction of a line to Delmarva Power's substation on Herring Run Road, to provide another connection over which the city can get power. Now, the city's only source for electricity is Delmarva Power's line that connects to the Pine Street substation.
When Delmarva Power wants to work on that line, all of the power to the city has to be shut off. That happened last fall, when electricity throughout Seaford was off Sept. 28, from 11:55 p.m. to 4:30 a.m. and again Oct. 12, from midnight to 3:15 a.m.
"With this new line, we would get a redundancy that we don't have," Owens said.
Owens said that the Pine Street and Central transformers, both nearly 50-years-old, are past due for replacement. The Central transformer in particular is wearing out. "The city has done a lot of hard work on life extensions over the years and has run out of options," he said.
In fact, the city is so concerned about the Central substation that part of the project will be boosting the lines that tie the Pine Street substation to it, in case the Central transformer goes out before the project is completed.
"If Central goes out before we get this done, the whole south side of the city goes down," Owens said. That includes Nanticoke Memorial Hospital, the Nanticoke Cancer Care Center, the Methodist Manor House and the Lofland Park Center nursing home.
The more robust tie-in lines will not be permanent.
In terms of the preliminary budget, Owens said that he realizes that it may turn out to be high. "I put a large contingency in there," he said. "I do believe that we will be able to trim that down to a smaller number." But if the money becomes necessary, he added, it is best to have made plans for that.
Patrick McCullar, CEO and president of the Delaware Municipal Electric Cooperative (DEMEC), of which Seaford is a part, spoke at the hearing about the city's financing options.
He recommended that the city use DEMEC financing, easier than the process of getting a loan through the U.S. Department of Agriculture, he said. He described the USDA loan process as "extremely complex, with burdensome rules."
The city could also borrow money for the project. That process, which would require the OK of citizens through a public referendum, would add to the city's debt, preventing it from borrowing should other needs occur, McCullar said. The DEMEC financing would not be considered a debt, he said. Rather, the payback would be part of the city's electric department operating expenses.
The DEMEC financing could be done over 20 years or 30 years. The 20-year agreement would carry a 2.74-percent interest rate and the 30-year agreement would have a 3.35-percent rate.
Based on a final cost of $9.75 million (Owens' preliminary budget plus DEMEC fees), the city's monthly payment under the 20-year agreement would be $59,125. Under the 30-year agreement, the monthly payment would be $47,670.
Seaford resident Dan Cannon was the only citizen to speak at the public hearing. He asked seven questions, among them why there is a contingency of 25 percent in the preliminary budget.
Owens said that it is difficult to project costs 18 to 24 months in the future. While he asked contractors to predict what the equipment will cost two years from now, the prices that he received were all based on current conditions.
In any case, he said, this is a preliminary budget. The actual cost will be nailed down when the city starts accepting bids.
Cannon also asked about the necessity of an extension of the city's power lines along U.S. 13 north to past the Herr's distribution center (on the southbound side of the highway) and then across the road to Old Furnace Road. "This would be a segment to nowhere," he said.
Owens acknowledged that that part of the plan has nothing to do with the substation project. But he said that as the city grows, it will need power lines there.
"The city thought that this would be an advantageous time to build that whole extension," he said. "I agree that this is the time to get something done there."
For your information The city will hold a second public hearing on its plans for a new electrical substation Thursday, July 28, 7 p.m. at city hall. For information, call city hall, 629-9173.
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