Salisbury City Manager David Treme said Tuesday he will make sure Carolina Power & Light has set aside sufficient funds to pay for a new U.S. 70 water line to its power plant.
The power company’s cost could be as much as $8.5 million, Treme estimated.
“I want an ironclad agreement that the money will be there when we bid and award the contract,” Treme assured Salisbury City Council.
Council met in a special meeting Tuesday afternoon to approve an “assignment and assumption agreement” in which CP&L assigns all of its right, title and interest in its Rowan County power plant to a newly formed limited liability corporation, Rowan Power LLC.
The new corporation — a safeguard against putting all of CP&L’s assets at stake in case of any claims against the Rowan facility — “agrees to perform and observe all of the covenants, agreements, terms, conditions, obligations, duties and liabilities” for which CP&L was formerly responsible.
That includes the “memorandum of understanding” Salisbury signed with CP&L on June 27, 2001. It described the obligations of the power company and the city in extending a new U.S. 70 water line to the power plant between Parks Road and N.C. 801.
The Rowan facility will need a 30- to 36-inch line to supply up to 7 million gallons of city water a day when it expands its plant from three to five units. The existing unit rely on natural gas or No. 2 fuel oil.
CP&L had agreed to pay for most of the cost of the new water line — an obligation now assumed by the new corporations.
Councilman Bill Burgin said he would feel better knowing that Rowan Power LLC has obtained a loan and set aside the full amount of money needed for construction of the line. He expressed concern that the city might start the project and, for some reason, the power company would decide to stop its expansion and no longer need the water.
“If I don’t see the cash I must have access to, then we’re not going to proceed with the line,” Treme said.
CP&L has told the city it will pay for the line in cash. It needed the city to sign off on the assignment agreement to proceed with getting a loan, Salisbury Finance Director John Sofley said.
CP&L’s expansion at the Rowan facility will represent hundreds of millions of dollars. In that respect, the water-line project is a small element of the company’s total investment, Treme said.
“This is a penny holding up a dollar,” Treme added.
To date, CP&L has paid much of the costs for preliminary engineering, attorneys and environmental studies, Treme said. Original cost estimates for the line were $6.5 million to $7 million, but Treme reported that the costs have since gone up. The city won’t know a final cost until the project goes out for bid.
The power company’s participation in the new line’s construction comes at a good time for the city, because the future widening of U.S. 70 to four lanes will force the city to move existing 12- and 16-inch water lines already in place to N.C. 801.
Contact Mark Wineka at 704-797-4263, or mwineka@salisburypost.com
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