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Thursday, August 07, 2008

CNME Gets $27.6 Million Loan for Expansion

By Laura Nesbitt
Mountain View Telegraph
      A multi-million dollar federal loan for improvements in Central New Mexico Electric Cooperative infrastructure has been approved.
       CNME recently received a $27.6 million loan from the Department of Agriculture to improve and expand services to its customers, according to a press release from the office of Sen. Pete Domenici.
       That money will be used to expand its service to 1,558 new customers, build 141 miles of new distribution line, improve 112 miles of distribution line, build three new miles of transmission lines and make other improvements throughout Bernalillo, Chaves, De Baca, Guadalupe, Lincoln, San Miguel, Santa Fe, Socorro and Torrance counties, the press release stated.
       “The money is available to draw down from loan funds, like a line of credit,” said Matthew Collins, chief operating officer. It will be used to complete the cooperative's four-year construction work plan.
       The money is available at any time and the cooperative plans to use it when needed, Collins said.
       “The (Public Regulation Commission) allows us to pass through interest costs just like we pass through power costs. And, yes, it does raise the rates whenever you pass that through. It is an increase,” said CNME General Manager and CEO John Wheeler regarding a potential rate increase.
       CNME has not begun drawing down on the loan so no rates have been raised because none of the loan money available has been used, Wheeler said.
       The cooperative has 35 years to pay off the loan, and interest on the loan will be charged monthly, Collins said.
       The company hired a consultant about a year ago who completed a voltage drop study and suggested a plan to fix certain problems in the cooperative's electricity system, Wheeler said.
       That study found that the load in the system in some areas had caused the voltage to be lower so bigger wire needed to be installed.
       The CNME construction work plan includes replacing some power lines in the Punta de Agua to Torreon area, installing new transmission line in the Moriarty area connecting to the substation north of Interstate-40, “and then the rest of it is connections to new consumers,” Wheeler said.
       “If we tried to do all this construction without borrowing money, we'd have to raise rates by 15 percent a year over seven years,” Wheeler said.
       According to Wheeler, the interest rate for CNME on the loan will probably be somewhere in the area of five percent, “which is typical.”
       But “it would be pure speculation on my part” to say how much the loan will affect the price of electricity for the average consumer because “the interest rate is set at the time we draw down from the loan fund,” which has not yet happened, he said.
       

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