Financing CapX 2020 transmission

Filed under:Uncategorized — posted by admin on December 2, 2010 @ 10:12 am

It’s been building, and here are two recent articles about it, they’re bonding to build transmission and upgrade the Laramie River Station coal plant to continue use of coal:

Agency that helps provide power to Alexandria to issue $141 million in bonds

The Western Minnesota Municipal Power Agency (WMMPA) will close December 2 on a $141-million power supply revenue bond issue.

By: Staff Report, Alexandria Echo Press

The Western Minnesota Municipal Power Agency (WMMPA) will close December 2 on a $141-million power supply revenue bond issue.

WMMPA provides financing for electric utility-related projects on behalf of Missouri River Energy Services, which has 60 member municipal electric systems – including the city of Alexandria.

There will be three series of bonds and they will be used to refinance higher-interest debt and to fund construction of new transmission facilities and power plant upgrades.

WMMPA has a power supply agreement with Missouri River Energy Services (MRES) that entitles MRES to the output and use of all of the power generating and transmission facilities that WMMPA has financed. The two organizations also have an agreement under which MRES provides administrative services for WMMPA.

The first series will consist of $9 million in tax-exempt bonds to refinance older bonds. These will have maturity dates of 2017 and 2018. The second series of bonds also will be used for refinancing of older bonds. This $32 million issue will be taxable and will carry maturity dates of 2012, 2013, and 2016.

Almost $100 million in Build America Bonds or BABs will make up the third series. BABs are taxable, but because Western Minnesota is eligible to issue tax-exempt debt, it will receive a payment from the U.S. Treasury equal to 35 percent of the interest on those bonds. “The net cost of these bonds will be significantly lower than the cost would have been under traditional tax-exempt financing,” said MRES Finance Director and CFO Merlin Sawyer.

The BABs will mature in 2046 and will fund the WMMPA/MRES share of the CapX 2020 Fargo Project, as well as upgrades to the Laramie River Station. The Fargo project involves construction of new electric transmission facilities in the region. The Laramie River Station, a coal-fired power plant located in Wyoming, is the principal generating resource serving MRES members. “The reason for the long maturity of the third series is to take advantage of the current low long-term interest rates. While interest rates have increased in the last few weeks, the net interest rate on these bonds is the lowest ever realized by WMMPA for similar maturities,” Sawyer said.

Citi was the senior manager, with Barclays as co-manager for all three series of bonds. The true interest cost will be 4.37 percent.

Fitch Ratings has given the WMMPA bonds a rating of AA- with a stable outlook. WMMPA is one of just a few joint-action agencies in the nation to earn a rating in the double A category from Fitch. Meanwhile, Moody’s Investors Service had an A1 rating on the bonds and changed its outlook on WMMPA’s bonds from stable to positive.

And another, this time Rochester:

RPU board gives green light to joining transmission group

12/1/2010 8:23:26 AM

By Christina Killion Valdez  –  The Post-Bulletin, Rochester MN

Rochester Public Utilities has seen a benefit by buying and selling power through

Midwest Independent System Operator, a non-profit regional transmission organization. But joining MISO as a transmission owner could amp that up.

A recent economic analysis showed a projected savings of $16.6 million by 2025 if the utility invests its transmission resources in MISO as a transmission owner. That dollar figure prompted the RPU board on Tuesday to start the application process.

By joining MISO, RPU will generate revenue for investments in transmission that would otherwise fall on RPU customers, said Wally Schlink, director of power resources at RPU. That’s because through MISO the cost of investing in transmissions would be spread out to all power consumers, Schlink said.

If accepted as a transmission owner, RPU would get $600,000 a year in additional revenues for the first few years, but that would eventually grow as the utility invests $35 million to $40 million in new transmission lines through CapX2020.

“The real benefit is when CapX 2020 goes online,” said Larry Koshire, RPU general manager. “Right now, we have no debt on the transmission system. With CapX there will be a bond debt.”

The process of becoming a transmission owner is expected to take six to eight months and cost about $250,000, which was included in the economic analysis. On Tuesday, the board approved $100,000 to get the process started.

Plans are to have the application complete to be considered for acceptance as a transmission owner at MISO’s June meeting, Koshire said.

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image: detail of installation by Bronwyn Lace