City Council gave the approval during a March 8 meeting, and NBU CEO Ian Taylor said the debt, which will come through a deal made with JP Morgan Bank, should be paid off in one year.
Taylor told council this would be possible through an adjustment to a section of consumers' electric bills called the generation cost recovery factor, or GCRF.
Taylor said GCRF is used by all electric utilities to recover costs due to the volatility of the Electric Reliability Council of Texas market, which is a market-based grid that covers about 90% of Texas and includes NBU.
With that adjustment, the average NBU electric bill will rise a little more than $6.50, from $118.31 in 2020 to $124.89 in 2021.
"Essentially what we're doing is trying to maintain a smooth bill for our customers," Taylor said, adding that in the next year NBU plans for the GCRF portion of an electric bill to be reduced this summer, when more energy is used to cool homes and businesses, and rise again in the fall.
There are other measures NBU can take, including utilizing energy reserves to pay for power, but Taylor said those will not cover the full costs for NBU. There are also several unknown factors such as legislative action, action from the state's Public Utility Commission and additional liquidity interest costs that may still come into play in the near future, he said.
Accommodating rapid growth through recent consumer rate increases has proven a pivotal consideration for NBU since well before the winter storm, and it is for that reason Taylor told council he did not want to pursue amortization of debt over a period of up to 30 years—a strategy other utility companies are examining—to minimize the impact to consumers.
NBU Chief Financial Officer Dawn Schriewer said NBU executives have been in talks with credit rating agencies since Feb. 24 to discuss the storm's financial impact on the company. Therefore, officials will have a better idea of NBU's financial standing in the coming weeks, Schriewer said.
NBU data shows the cost of power for NBU in February was estimated at $82 million, and the total cost of power budgeted for the power company for the entire fiscal year topped out at $88.5 million.
"Paying it off in a year, it's a great goal," Mayor Rusty Brockman said of the debt issuance.