City Council unanimously approved the authorization of a $4.1 million loan to North Bay Hydro Services Inc. for the development of a co-generation plant at the North Bay Regional Health Centre. The loan is for a period of 15 years at an interest rate of 3.6 per cent. PHOTO BY LIAM BERTI
The City of North Bay is lending North Bay Hydro Services approximately $4.1 million for the development of a North Bay Regional Health Centre co-generation plant.
City Council unanimously approved the decision during Monday night’s meeting, authorizing the 15-year loan with an interest rate of 3.6 per cent to North Bay Service Inc. (Servco).
According to Deputy Mayor Tanya Vrebosch, the hospital currently has limited backup capabilities. The new co-generation plant will allow the centre the ability to generate its own power during a blackout, helping the facility avoid power outages.
“Currently the hospital right now has limited backup and they can’t power the entire facility, therefore patients and staff are impacted,” she explained. “With the co-generation plant, they will still need to manage their consumption but they will be able to carry out their critical functions for as long as necessary.”
According to the report, the co-generation system uses natural gas to produce two energy outputs, electricity and hot water. The plant will be capable of operating in island mode when the grid is unavailable, which can meet up to 85 per cent of the health centre’s electrical requirements.
Compare that to the current back up plant, which only meets roughly 40 per cent of the facility’s requirements.
“Today they have diesels which might meet half of their needs without power after a few hours,” Vrebosch explained. “This is a good investment and we will be supporting two of our major community partners.”
Vrebosch was quick to point out that the investment is not putting the city in debt. Instead, she says the loan is just an alternative to investing the money elsewhere, which the city would normally do with other low-risk investments.
The report says that the city will convert cash investments coming due and use cash on hand to accommodate the payments of the loan.
“This is not us going into debt; we have cash flow, so when we get tax money throughout the year from taxpayers, we have to invest it in short-term periods,” Vrebosch explained.
While Coun. George Maroosis did approve the project, he also raised concern for the interest rate that the city is charging. He said he would be happier if they were charging slightly more interest based on what might happen with the uncertainty of the future.
Vrebosch countered by saying if Servco were to receive the loan from Infrastrucutre Ontario, they would be charging 3.3 per cent for the 15 years, so comparitively the city should be happy with what she called a "decent rate."
The current investment opportunities for a 15-year period are yielding anywhere between 3.8 and 4.4 per cent, the higher of which do not typically fit into the city’s investment strategy due to their higher risk.
According to an investment report in May of this year, the city’s investments held at December 31, 2013, had yields ranging from 1.25 to 4.87 per cent.
Other benefits outlined in the report include the project assisting North Bay Hydro Distribution Limited in achieving its conservation objectives and a five per cent reduction in utility costs from the energy purchased from the co-generation project for the North Bay Regional Health Centre.
