GridLiance acquires Nixa transmission assets for $10M

Doug Colvin: Nixa residents are not expected to see a rate increase during the transition.

A GridLiance GP LLC subsidiary acquired the city of Nixa’s electric transmission assets for $9.972 million.

Effective April 1, the acquisition includes a 10-mile 69 kilovolt transmission line between the city of Springfield and Southwestern Power Administration, as well as four substations with related infrastructure. The Federal Energy Regulatory Commission approved South Central MCN LLC – the Dallas, Texas-based GridLiance subsidiary – to complete the transaction, stating it is “consistent with the public interest.”

Nixa Public Works Director Doug Colvin said the city chose to sell the assets following incoming regulations and tariffs by President Donald Trump on products needed for power transmission operations.

With changes coming down the pike, Colvin said the city anticipated costs would increase some $200,000 annually, in addition to the current $1 million expenditures. Public Works has an annual $18 million budget. Colvin said the additional incoming regulations, involving grid and cybersecurity, would require more manpower than the city could afford.

The line was originally purchase by the City of Nixa in 2006, Colvin said, via a bond issue. This connected the city to Springfield’s James River Power Station in addition to the Southwestern Power Administration line.

“That way, if one went down, we had transmission from the other,” Colvin said. “We added some redundancy.”

The city will still operate on the transmission line and pay an annual fee to GridLiance through Southwest Power Pool. Because of the acquisition, Colvin said the city had to switch to Southwest Power Pool. This will initially increase costs by the projected $200,000 because SPP has higher rates than Southwestern Power Administration. But, city officials expect that cost to decrease to the current rate over the next five years as more municipalities enter the same transmission format. Already, he said, Carthage has jumped on board.

Colvin said the city will do a rate study to determine any rate adjustments for Nixa residents. However, he doesn’t anticipate electric rates going up during the transition because of new reserve funds from the acquisition.

There is $4 million left of bond debt from the 2006 purchase, and Colvin said the city plans to use the nearly $10 million from the acquisition to pay off that sum. The remaining money will go into the city’s power system, which is in need of updates and expansion, Colvin said, to accommodate Nixa’s growing population.

The acquisition funds will allow for the city to pay for some of those updates in cash, rather than request another bond. This will most likely also allow the updates to occur, he said, without raising rates.

“We’ll be able to pay off the bond then and we’ll have those reserves,” he said. “We’ll be able to do system upgrades because of our growth over the next five to 10 years without having to raise rates.”