The city of Independence is one step closer to securing partial ownership in another energy facility.

The city of Independence is one step closer to securing partial ownership in another energy facility.

In an emergency ordinance Monday night, the City Council approved the borrowing of nearly $55.2 million from the Missouri Development Finance Board. That’ll pay for Independence Power & Light’s acquisition of a 12.3 percent ownership in Dogwood Energy Facility in Pleasant Hill, Mo.

The city’s purchase of about 75 megawatts aims to ensure a “stable and cost-effective resource” for its existing power supply resources, staff say.

But buying into Dogwood, a natural gas, combined cycle-generating plant, also is taking place because of stricter federal government regulations.

A majority of IPL’s energy supply now comes from coal-fired generation, IPL staff told the council last December. But last summer, the EPA finalized the Cross-State Air Pollution Rule (known conversationally as the “zapper rule”), requiring states to significantly improve air quality by reducing power plant emissions that contribute to pollution in other states.

That rule is currently tied up in the courts, and meanwhile, the EPA is aiming for a transition back to its 2005 Clean Air Interstate Rule, which “zapper” had planned to replace.  

The city’s 2003 electronic revenue bonds will be refinanced to improve the interest rates for the Dogwood purchase. Standard & Poor’s assigned an A- rating to these electric utility obligations. S&P also affirmed the city’s general obligation credit rating of A.

“We’re very pleased with what we had, especially with the turmoil that was in the municipal market last week, with the prices going up and down and the lack of stability,” said Jim Harlow, the city’s director of finance and administration. “We did very good.”

The Missouri Joint Municipal Electric Utility Commission, Kansas Power Pool and the Kansas City (Kan.) Board of Public Utilities also are considering partial ownership in Dogwood.

 The final 5 percent rate increase approved by the City Council in 2008 will take effect in July 2012, which should help cover additional costs associated with the Dogwood facility, IPL Deputy Director Paul Mahlberg said in December 2011.

“This is just another time that we’re trying to save our rate payers some money by buying into a plant that we can get power from without having to rebuild some of our own and buy on the wheel,” Mayor Don Reimal said.

Harlow agreed.

“Natural gas prices are very good currently,” he said, “and they intend to stay at a very competitive rate as a fuel source for the next several years.”