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

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Presentation on theme: "Plum Point Project Municipal Energy Agency of Mississippi Geoffrey Wilson Executive Director."— Presentation transcript:

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

2 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 Culture Clash between: –Co-ops –IPP/developer –Joint action agencies/munis –IOUs Difference in: –Risk evaluation –Path to financing –Project evaluation Diversity made a stronger project Diverse participants

6 Longer financing timeline –Public notice Require more definitive transmission timeline –Lower risk threshold JAA/Munis

7 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 Why a convertible PPA

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

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

10 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 Drivers

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

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

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

14 For muni, several closings have to take place simultaneously: –Bond closing –Financial close –Project closing/participation close Muni cant close project, then close financing later.. Muni Bond Closing

15 Bond Buyer Magazine November 2006


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