Unalaska, AK – The city council is discussing the best way to finance the new $43 million powerhouse. The money will come from a combination of grants, bonds, and city money. The city's financial engineering consultant Mike Hubbard says the council needs to determine how much money comes from each source.

"If we take more money out of the general fund, what we do is lower the cost of the project a little bit right now," he explains. "But at the same time it takes away the available cash that you could use for other purposes in the future."

The city has already put 13 million toward the project and they have 2.5 million from state and federal grants. They are authorized to bond for up to 30 million dollars at seven percent interest. Some city council members think more of the cost should be paid now with cash from the general fund, but Hubbard says that may not be the best idea.

"The argument for using debt is that the rate payers who are using the asset in this case the powerhouse and the new generator they're paying off the debt, they're paying for the powerhouse, the asset that they're using," he says. "Whereas if we use cash, that means that yesterday's rate payers and paying for an asset that would be used in the future."

Overall, Hubbard says the project will be a benefit for the community. The increase in fuel efficiency of the three new generators will negate the cost of the project and the bond paybacks and still reduce power bills by 3 to 5 cents per kilowatt hour, unless the price of fuel drops significantly.

Hubbard says despite the country's economic crisis, the bond market is starting to warm up and it would be possible to bond for all 30 million. The city council will re-examine the numbers and other scenarios that pull more money from the general fund before deciding how much to bond for. They're next meeting is this Friday at 7 pm.