Stowe voters approve solar

Stowe residents voted 91-45 last Thursday to go solar, allowing the utility to pursue up to $3.5 million in federal zero-interest loans to build a 1-megawatt solar generating facility atop the town’s old gravel pit in Nebraska Valley.

After a jam-packed couple of months, scrambling to get voter approval to apply for federal Clean Renewable Energy Bonds within a tight application window, the utility’s effort to build the solar arrays is far from finished. But the affirmative vote is a good start.

Matthew Rutherford, Stowe Electric’s manager of regulatory compliance, said he was encouraged by the vote, even though only 3.7 percent of Stowe’s registered voters cast ballots, because it shows a contingent in town “shares the same ideas about renewable clean energy as Stowe Electric does.”

Plenty of questions about the project remain to be answered. Among them: Will the bonds be interest-free, or something very close to it? Is the $3.5 million price tag estimate an overly high estimate, or is it close to the actual cost? Will the consultant who did the preliminary studies on the project get the job, or will it go to the lowest bidder?

In addition, the project will have to go back to voters when more solid details are available, at least three months from now.

Despite the uncertainties, “I’m feeling better about proceeding at a more comfortable pace now,” said Ellen Burt, Stowe Electric’s general manager. “At the next vote, we’ll be able to tell them more; we’ll have all the information.”

Aiming for zero

The $3.5 million in funding that Stowe Electric is seeking is no sure thing.

First, there’s no guarantee that Stowe Electric will receive any of the federal Clean Renewable Energy Bonds — they’re called CREBs. There’s a limited amount of bond money, and the bonds could be popular, according to Thomas Porter, a loan officer with the Vermont Economic Development Authority.

The authority is helping the Stowe, Hyde Park and Hardwick electric departments with the loan applications, which were due Wednesday.

Porter said the CREBs are doled out by the U.S. Treasury, and $516 million is available for public power providers all over the nation. The money is left over from bonds authorized by the Treasury seven years ago; they were taken back because many utilities didn’t actually have shovel-ready projects.

The Stowe, Hyde Park and Hardwick applications were all submitted together, and they are the only Vermont utilities that lined up preliminary project proposals quickly enough to apply for the loans.

Second, it isn’t a given that the financing will actually be interest-free, even though the Stowe proposal approved last week states that the $3.5 million is contingent on the project being “financed primarily” with CREBs “at an annual interest rate of zero percent.”

Burt says the CREBs bond structure is fairly complicated, and it was perhaps overly simple to call them zero-percent loans.

The loans don’t come from the federal government, but from typical banks or lending institutions, with which Stowe, Hyde Park and Hardwick will negotiate for favorable rates, just like any loan.

What makes CREBs different is that the federal government issues tax credits to the lending bank, based on a percentage of the Treasury’s daily qualified tax credit bond rate, and those credits would offset the interest that banks charge. As the name suggests, that rate fluctuates frequently.

According to Burt, right now the rate would be enough to offset whatever interest banks charge by 3.15 percent. With banks quoting Stowe Electric at around 3.5 percent interest, that credit would knock the interest rate down to 0.35 percent, something approaching interest-free. If that federal tax credit rate were to increase to, say, 5 percent, the tax credit truly would reduce the bank’s interest rate to zero.

In sum, Burt said, “it very well could be zero percent, or it could be, virtually.”

What am I bid?

So far, Encore Redevelopment, a Burlington company, has done the preliminary designs and site selections for both Stowe and Hyde Park.

According to Rutherford, Encore was already under contract with Hyde Park, and since Burt and Hyde Park’s general manager Carol Robertson are friends — Burt also used to work for Hyde Park — it made sense to share resources. Encore did the Stowe work basically for free, Rutherford said. “We figured we could just pool us together and maybe achieve some efficiencies.”

Bids will certainly be sought for building the solar project. Already, a couple of area solar manufacturers have expressed interest, including Local Energy and Grow Solar.

Kevin Weishaar, Stowe Electric’s controller, said that, so far, the utility hasn’t paid anything other a $28,000 retainer to Encore, which hasn’t cashed the check yet. He understands concern about opening the project up for bids, but time was of the essence.

“We didn’t have time” to request bid proposals, review the bids, select a company, warn a vote and still make the CREBs deadline, Weishaar said in an email Tuesday. “And the CREBs financing opportunity was just too good not to go after.”

At an informational meeting before the vote, Doug White wondered aloud whether Stowe should be adding another big-ticket piece of infrastructure, after already building a large public safety building and a town arena, each of which cost more than $6 million.

But those projects are paid for from property taxes; the solar facility will be paid for from electric department revenue. Another difference: Those projects attracted far more voters.

According to Town Clerk Alison Kaiser, in 2008, when the public safety building was approved, 47 percent of registered voters went to the polls.

In 2012, for the Stowe Arena bond vote, voter turnout was 49 percent.

Last week: Just under 4 percent.