In what is by far the largest electric project in the new fiscal year, Maryville is set to pay millions as it moves its Big Springs Road substation across West Lamar Alexander Parkway by early to mid-2020.
Plans for the new substation have been under consideration for about two decades, officials said. But spending on the project was only recently approved as a part of the fiscal 2020 budget.
Preliminary work is set to begin this fall.
The new substation will be built almost directly across from the current power complex on West Lamar Alexander Parkway, roughly between Petro’s Chili & Chips and TNBANK.
Between costs for the land and equipment, the new substation’s price tag is around $8 million total, with $3 million set aside for the purchase of the land and up to $5 million for the purchase of new equipment.
“It is a really good operational improvement over what we currently have,” City Manager Greg McClain said. “We sit inside the (Tennessee Valley Authority) footprint and that complicates matters.” He explained that the substation Maryville plans to build will effectively separate the city from TVA’s jurisdiction at the current site.
City Utilities Director Baron Swafford said the current complex — which he called a switching station — is mostly owned by TVA, including all of the land and 90% of the equipment. “From a high voltage standpoint, it’s like a giant switch box,” Swafford said.
“Every time we have to go inside our substation, we have to go inside their fence. That puts us in their world,” McClain said. “They’ve got to know when we’re coming or going.”
But that will change with the move.
Though the city will still be TVA’s customer, it will not be under the regulatory authority that comes with being on TVA land. Now Maryville will be able to operate independently.
Swafford estimated the substation was built in the 1950s or ’40s but said he wasn’t exactly sure. “We’ve spent some money in there over the years replacing some stuff.”
He said the maintenance there can be difficult, adding a lot of gear would need to be customized if it had to be replaced. “A vast majority of that substation is difficult to energize. ... It was built 60 years ago, and it’s not the way we’d build it today.”
The project has been put off because of other needs in the area, and the city had been in conversations to replace a great deal equipment in the substation, Swafford said. “The consultants we were working with said, ‘Have you ever thought about getting out of that substation and just starting over?’”
The city agreed after a consideration of costs. “We looked at our finances. We’re in a good position because we’re going to have some debt roll off in a year or two,” Swafford said.
But the city expects most of the project is to be funded by borrowed money, Maryville Finance Director Mike Swift confirmed.
Swift said the only upcoming costs will be the construction on the site, set at around $5 million. “For that size, we’ll pay a portion of that with cash and borrow for the remainder,” he said, adding it will probably be around the end of the year when the city borrows the money so that it can secure a good interest rate.
Swift said the land already has been purchased for just under $2 million and expects the total cost of the project will come out lower than the projected $8 million.
Electric fund capital expenses for this year include more than $8.7 million, and Swift confirmed $5 million of that will be for the substation, the largest expenditure of the year.
Swafford said a majority of the cost in this project will come from the site’s two new transformers, which cost more than $1 million apiece. The pair of three-phase transformers will be built into a single unit, making it simpler than it was before to complete maintenance.
Most site work and design is complete, and the next step in the process will be to move and tap into lines already on the new substation property. That will happen this fall, Swafford said. He also confirmed construction on the actual substation is set to start late spring or early summer of 2020.
Officials interviewed all agreed that this was the best time to tackle the project, both financially and strategically, as the more than half-a-century old substation came due for changes.
“Everything has a life,” McClain said. “A roof has a life. A car has a life. A substation has a life. It’s time to upgrade it. But it made sense that, in the process of upgrading it, why not just move it out on its own?”