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 MEAMJoint Action AgencyMunicipal utility membersundivided 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 AgencyEmpire (IOU)Arkansas munis - selectOther buyersSMEPA
5 Diverse participants “Culture Clash” between: Difference in: Co-opsIPP/developerJoint action agencies/muni’sIOU’sDifference in:Risk evaluationPath to financingProject evaluationDiversity made a stronger project
6 JAA/Muni’s Longer financing timeline Public noticeRequire more definitive transmission timelineLower risk threshold
7 Why 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
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 closeNot enough time to ramp up bond financing effortCan’t “pre-do” public notice process
10 Drivers 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
11 Trade-offs Bridge financing alternative Conversion Interest ratesConversionfinancing “breakage” feesInterest rate swapsPPA still attractive
12 PPA/Ownership trade-offs Higher imbedded interest rateLower construction riskOwnershipLower costAsset life
13 Time Not rushed All MEAM and municipal approvals were unanimous. Make sure all parties are aware of:ObligationsCostsEconomicsContingenciesAll MEAM and municipal approvals were unanimous.
14 Muni Bond ClosingFor muni, several closings have to take place simultaneously:Bond closingFinancial closeProject closing/participation closeMuni can’t close project, then close financing later..