A proposal is to go before the North Little Rock City Council early in 2006 that calls for issuing $137 million in bonds to take part ownership in LS Power Development's $1.3 billion Plum Point pulverized coal-fired electric plant to be built near Osceola.

Current plans envision the 800-megawatt power plant to be turning out electricity in early 2010.

The city produces 14 percent of the electricity it sells to residents with a hydroelectric generator at Murray Lock and Dam on the Arkansas River. But 86 percent of the power provided by the city is purchased on the wholesale market.

For 20 years, North Little Rock has been able to lock in low, fixed rates to keep its customers from getting shocked by large rate increases. But market rates are being pushed higher by increased natural gas prices at a time when North Little Rock's contract with provider Duke Energy of Charlotte, N.C., is to expire in March 2007.

The proposal for the city to use proceeds from a bond issue to buy 10 percent of the Plum Point operation is projected to cost the city a $7.9 million a year over 30 years, if the bonds are sold at 4.5 percent interest, according to Joe Gertsch, general manager of the city utility division. The bonds would be paid off with revenue from sale of electricity to city residents and businesses.

But Gertsch said cost would be worth it.

"The long-term cost (for wholesale power) is considerably higher than we are currently paying," he said last week. "If we purchase a 60 megawatt interest in Plum Point, our savings will be $13 million a year compared with going into the market place and buying that power wholesale."

But buying into the Plum Point plant would still leave the city with three years of exposure to much higher, open-market wholesale prices for electricity. Gertsch doesn't much hope for relief until the Plum Point operation goes on-line in 2010, and retail prices to customers are likely to grow by 30 percent.

Deputy City Attorney Jason Carter says the city hopes to move quickly to become part of the LS Power financing package. The City Council wants to be able to address public concerns by the time it approves a bond issue, to avoid any challenge to the plan.