Settlement to help pay down AFN debt

The Ashland City Council will use a $636,275 court settlement to help pay Ashland Fiber Network debt for the next two years.

The city has a $1,242,000 debt payment due in the coming fiscal year, which starts in July.

The City Council will use $242,000 from the settlement to help make that payment, with AFN and other city departments paying the rest. That will leave $394,275 to help make the following fiscal year's debt payment.

During the current fiscal year, the city had to pay $1 million on AFN's debt. using $242,000 for the coming fiscal year, the city departments will be shouldering $1 million again, even though the debt payment will have grown to $1,242,000, City Administrator Martha Bennett explained.

Launched in the late 1990s, the city's Internet and cable television system sank $15.5 million in debt as construction costs exceeded estimates and the city and Charter Communications offered cut-rate prices on cable television.

The city privatized the television service while keeping its Internet service in 2006. Since then, AFN has stopped falling further into debt and has been able to pay part of its debt payments. However, other departments &

including Ashland Fire Rescue &

have endured cuts to help pay the debt.

On Tuesday night, the City Council unanimously agreed to accept the $636,275 settlement offer from the Bonneville Power Administration, which the Ninth Circuit Court of Appeals found had erroneously provided benefits to investor-owned electric utilities at the expense of public utilities like the Ashland Electric Department.

A council majority then voted to direct the settlement money toward AFN debt.

Electric Department Director Dick Wanderscheid had proposed using $300,000 of the money to pay for a community solar project that the council authorized in February.

Councilors decided to stick with their original plan of asking residents to voluntarily invest in the solar project to be built on top of a city building on North Mountain Avenue. Each of 363 solar panels will cost $825 and participants will get credits on their electricity bills for the power their panels generated. However, the payback will be only $348 to $425 over 20 years on one panel &

or about half of the original investment.

If no one buys a panel, everyone's electric bill would have to rise 21 cents per month for a $100 bill to cover the project.

Funding the solar project with settlement money would have eliminated debt and interest payments that will last for 16 years. However, the interest rate on the solar project loan is only 1.25 percent because of a federal subsidy.

In an unrelated move Tuesday night, the City Council changed the way electric rates are calculated, but electricity customers will see virtually no change to their bills.

Customers who use more electricity than average could see their bills rise by — percent, while customers who use less electricity than average could see their bills go down by about — percent, said Ashland Administrative Services and Finance Director Lee Tuneberg.

Staff writer can be reached at 479-8199 or

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