Presentation on theme: "Municipal utility members"— Presentation transcript:
1Plum Point Project Municipal Energy Agency of Mississippi Geoffrey Wilson Executive Director
2Municipal utility members MEAMJoint Action AgencyMunicipal utility membersundivided 6% interest$103 mm bond issue
3MEAM MEAM used convertible PPA Power purchase agreement with right to convert to equity
4Other partners East Texas Electric Coop LSP Missouri Joint Action AgencyEmpire (IOU)Arkansas munis - selectOther buyersSMEPA
5Diverse participants “Culture Clash” between: Difference in: Co-opsIPP/developerJoint action agencies/muni’sIOU’sDifference in:Risk evaluationPath to financingProject evaluationDiversity made a stronger project
6JAA/Muni’s Longer financing timeline Public noticeRequire more definitive transmission timelineLower risk threshold
7Why a convertible PPAJAA Requirements for PPA are less than for bond issue and ownership of assetsFinancing process slower for municipalsPublic notice process – up to 60 dayTiming of public meetingsSome are simultaneous
8Attributes MEAM had 60 days after developer closing to convert. MEAM had 90 days after conversion to achieve financing
9Critical Decision Point 30 days between transmission answer and financial closeNot enough time to ramp up bond financing effortCan’t “pre-do” public notice process
10Drivers Desire to get EPC executed Cost escalationVendor fabrication queueallow developer/partners to close financingGet project goingDelay ownership execution as long as possibleClose in orderly fashionBond insuranceRatings presentationsPublic notice procedures
11Trade-offs Bridge financing alternative Conversion Interest ratesConversionfinancing “breakage” feesInterest rate swapsPPA still attractive
12PPA/Ownership trade-offs Higher imbedded interest rateLower construction riskOwnershipLower costAsset life
13Time Not rushed All MEAM and municipal approvals were unanimous. Make sure all parties are aware of:ObligationsCostsEconomicsContingenciesAll MEAM and municipal approvals were unanimous.
14Muni Bond ClosingFor muni, several closings have to take place simultaneously:Bond closingFinancial closeProject closing/participation closeMuni can’t close project, then close financing later..