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Municipal utility members

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Presentation on theme: "Municipal utility members"— Presentation transcript:

1 Plum Point Project Municipal Energy Agency of Mississippi Geoffrey Wilson Executive Director

2 Municipal utility members
MEAM Joint Action Agency Municipal utility members undivided 6% interest $103 mm bond issue

3 MEAM MEAM used convertible PPA
Power purchase agreement with right to convert to equity

4 Other partners East Texas Electric Coop LSP
Missouri Joint Action Agency Empire (IOU) Arkansas munis - select Other buyers SMEPA

5 Diverse participants “Culture Clash” between: Difference in:
Co-ops IPP/developer Joint action agencies/muni’s IOU’s Difference in: Risk evaluation Path to financing Project evaluation Diversity made a stronger project

6 JAA/Muni’s Longer financing timeline
Public notice Require more definitive transmission timeline Lower risk threshold

7 Why a convertible PPA JAA Requirements for PPA are less than for bond issue and ownership of assets Financing process slower for municipals Public notice process – up to 60 day Timing of public meetings Some are simultaneous

8 Attributes MEAM had 60 days after developer closing to convert.
MEAM had 90 days after conversion to achieve financing

9 Critical Decision Point
30 days between transmission answer and financial close Not enough time to ramp up bond financing effort Can’t “pre-do” public notice process

10 Drivers Desire to get EPC executed
Cost escalation Vendor fabrication queue allow developer/partners to close financing Get project going Delay ownership execution as long as possible Close in orderly fashion Bond insurance Ratings presentations Public notice procedures

11 Trade-offs Bridge financing alternative Conversion
Interest rates Conversion financing “breakage” fees Interest rate swaps PPA still attractive

12 PPA/Ownership trade-offs
Higher imbedded interest rate Lower construction risk Ownership Lower cost Asset life

13 Time Not rushed All MEAM and municipal approvals were unanimous.
Make sure all parties are aware of: Obligations Costs Economics Contingencies All MEAM and municipal approvals were unanimous.

14 Muni Bond Closing For muni, several closings have to take place simultaneously: Bond closing Financial close Project closing/participation close Muni can’t close project, then close financing later..

15 Bond Buyer Magazine November 2006

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