Snohomish County PUD’s Bond Ratings Upgraded By S&P Global Ratings
March 21, 2022
by Paul Ciampoli
APPA News Director
March 21, 2022
Washington State-based Snohomish County PUD’s electric and generation system revenue bond ratings were recently upgraded from AA- to AA by S&P Global Ratings.
According to S&P, the rating upgrade reflects the agency’s positive view of the PUD’s diverse and reliable power portfolio and retail revenue base that proved resilient during the pandemic.
S&P cited several key factors for the PUD’s upgraded bond rating in its report, including:
- The PUD’s largely residential retail venue base, good customer diversity and above-average median household income give it a robust service area with economic fundamentals.
- A low-cost, non-carbon-emitting power supply, prudent rate-setting practices, and sound management, policies and planning.
- Rates that are generally in-line with the state average and moderate ratemaking flexibility.
- Current system debt that is modest in addition to flexibility to issue additional debt.
Recent decisions by the PUD’s Board of Commissioners to increase rates and support the need for solid financial reserves were also factors in S&P’s decision to upgrade its bond rating.
S&P also cited the PUD’s Integrated Resource Plan, which was adopted in 2021, and the county’s strong economic stability as mitigation to exposure and risk of climate change and evolving regulatory environment around fish and wildlife and clean energy.
Greenville Electric Utility System Earns Top Financial Reporting Award
March 4, 2022
by Paul Ciampoli
APPA News Director
March 4, 2022
The Government Finance Officers Association of the United States and Canada (GFOA) has awarded the Certificate of Achievement for Excellence in Financial Reporting to Texas public power utility Greenville Electric Utility System for its annual comprehensive financial report for the fiscal year ended September 30, 2020.
The report has been judged by an impartial panel to meet the high standards of the program, which includes demonstrating a constructive “spirit of full disclosure” to clearly communicate its financial story and motivate potential users and user groups to read the report.
Finance Manager Damaris Venegas and General Manager Alicia Hooks
The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting, and its attainment represents a significant accomplishment by a government and its management, Greenville Electric Utility System noted.
Fitch Revises Rating Outlook On Provo City, Utah, To Positive From Stable
February 3, 2022
by Paul Ciampoli
APPA News Director
February 3, 2022
Fitch Ratings has revised the rating outlook on Provo City, Utah, to positive from stable and affirmed the “AA-“ ratings on bonds issued by Provo City on behalf of the electric utility system Provo Power.
The bonds in question are $14.9 million energy system revenue bonds, series 2015A.
In addition, Fitch has assessed a standalone credit profile (SCP) of ‘aa-‘. The SCP represents the credit quality of the electric system on a standalone basis, irrespective of its relationship with and the credit quality of the city of Provo.
Fitch said the positive outlook reflects the electric system’s improved financial profile and Fitch’s expectation that deleveraging will continue through 2026, beyond levels previously anticipated by Fitch.
Leverage, as measured by net adjusted debt to adjusted funds available for debt service was 5.1x in 2021, an improvement over the prior year’s 5.5x. The fluctuation in leverage over the past two years was primarily the result of the impact of COVID-19 on electrical demand at the onset of the pandemic in 2020, followed by recovery in 2021, Fitch said.
Leverage was additionally impacted in 2021 by a spike in the Fitch-adjusted net pension liability. Going forward, leverage ratios are expected to trend below 5.0x by 2024, provided consistent rate increases are implemented to support the electric system’s ongoing capital needs.
The rating also reflects Provo Power’s “very strong revenue defensibility, supported by a growing and economically sound service area and the electric system’s independent legal ability to adjust rates that are highly affordable,” the rating agency said.
Moreover, the electric system’s very low operating risk reflects the all-requirements power sales agreement with the Utah Municipal Power Agency that provides the electric system with a competitively priced and diverse source of power, Fitch said.
Fitch Cites Silicon Valley Power’s Strong Financial Performance In Affirming Rating On Bonds
January 18, 2022
by Paul Ciampoli
APPA News Director
January 18, 2022
Fitch Ratings recently affirmed the “AA-“ rating on bonds issued by Silicon Valley Power (SVP), which is the operating public power utility for the City of Santa Clara, Calif.
The rating was affirmed for $48.975 million refunding revenue bonds, series 2013A and 2018A and the rating outlook is stable, Fitch noted.
“The affirmation of the ‘AA-‘ ratings reflects SVP’s strong financial performance over the past three years, resulting in lower net leverage,” Fitch said.
SVP’s financial profile “exhibits some variability in operating income as a result of hydroelectric availability, but is supported by robust liquidity levels,” the rating agency said.
It also said that the rating reflects the utility’s low operating cost burden associated with a primarily natural gas, hydroelectric and renewable generation portfolio.
SVP is an enterprise fund of the city of Santa Clara, providing service to approximately 59,200 customer accounts within the city’s boundaries.
The city of Santa Clara “is the heart of Silicon Valley and includes an affluent service territory with a considerable concentration of high-tech industries and strong load growth,” Fitch pointed out.
SVP continues to experience strong customer and load growth, with much of the growth resulting from increased data center activity at technology companies, it said.
“Rating concerns related to customer and industry concentration are partially offset by the diversity of business activities represented by the customer base and the demonstrated stability in demand over the past decade,” Fitch said.
The retail electric utility is fully integrated with direct and joint ownership of generation, transmission and distribution facilities. Power supply is provided primarily by SVP’s locally owned natural gas-fired generation plant and purchased power allocations from the Northern California Power Agency and Western Area Power Administration that include natural-gas, hydroelectric and geothermal resources. SVP supplements these resources with increasing renewable purchases.
Fitch considers the electric system to be a related entity of the City of Santa Clara (not rated by Fitch) for rating purposes, given the city’s oversight of the system, including the authority to establish rates and budget of the electric system.
The rating on the electric system bonds is not currently constrained by the credit quality of the City of Santa Clara, the rating agency said.
APPA Launches New Member Webpage On Infrastructure Law Implementation
January 10, 2022
by Paul Ciampoli
APPA News Director
January 10, 2022
Members of the American Public Power Association (APPA) now have access to a webpage dedicated to keeping them up to date on activity and funding opportunities related to implementation of the Infrastructure Investment and Jobs Act (IIJA).
APPA is also encouraging members to use the Federal Register and Grants.Gov to make specific searches for agencies or programs that are of interest, as it cannot guarantee the webpage will be exhaustive of all funding opportunities.
Additionally, APPA said its members should consider signing up for agency-wide or office specific newsletters based on their areas of interest.
APPA’s ILJA webpage is available to members by clicking here.
The ILJA was signed into law by President Joe Biden on Nov. 15, 2021. The law includes $1.2 trillion in funding, including $550 billion in new federal spending not previously authorized, for transportation, energy, and water infrastructure.
The law includes several potential funding opportunities for public power including for electric and hydrogen vehicle fueling infrastructure, grid resiliency infrastructure, smart grid investments, physical and cybersecurity infrastructure, incentives for hydropower production and efficiency infrastructure, energy efficiency and weatherization, and broadband infrastructure.
California Community Choice Aggregator Earns “A” Credit Rating From S&P
December 19, 2021
by Paul Ciampoli
APPA News Director
December 19, 2021
California community choice aggregator (CCA) East Bay Community Energy (EBCE) has been given an “A” issuer credit rating from S&P Global Ratings.
S&P cited EBCE’s solid financial performance. At fiscal year-end 2021, EBCE had no debt outstanding.
The rating agency also said that EBCE’s environmental risk exposure is low, based on its predominantly carbon-free resource portfolio.
The outlook is stable.
“The credit rating is important for two reasons,” said EBCE CEO Nick Chaset. “For EBCE’s counterparties, such as renewable energy project developers, it shows that we’re on solid financial footing and are low risk, which can help us secure the best terms in our contracts. This translates to better access and service of low-cost, long-term renewable energy for EBCE customers in the decades to come.”
EBCE operates a community choice energy program for Alameda County, Calif., and fourteen incorporated cities, serving more than 1.7 million residential and commercial customers.
EBCE initiated service in June 2018 and expanded to the cities of Pleasanton, Newark, and Tracy in San Joaquin County in April 2021.
The American Public Power Association has initiated a new category of membership for community choice aggregation programs.
Senate Finance Committee Proposal Includes Direct Payment Of Energy-Related Tax Credits
December 12, 2021
by Paul Ciampoli
APPA News Director
December 12, 2021
The Senate Finance Committee on Dec. 11 released updated text of the Committee’s title of the Build Back Better Act (BBBA) that includes a refundable direct payment of energy-related tax credits, mirroring the House-passed version of the BBBA.
Section 126104 of the tax title would create new section 6417 of the Internal Revenue Code allowing for “elective payment of applicable credits.” These credits include the:
- Section 30C credit for alternative fuel;
- Section 45 production tax credit;
- Section 45Q carbon oxide sequestration credit;
- Section 45V zero-emission nuclear power production credit;
- Section 45W clean hydrogen production credit;
- Section 48 investment tax credit, and
- Section 48D transmission tax credit.
The provision has been specifically written to allow public power utilities and rural electric cooperatives to claim this refundable direct payment tax credits. The Tennessee Valley Authority is also explicitly allowed to claim refundable direct payment tax credits.
In addition, the refundable direct payments would generally be reduced by 15 percent for facilities that are financed with tax-exempt bonds.
Additionally, the section 48 investment tax credit has been expanded to include energy storage technology, qualified biogas property, microgrid controllers, and hydropower environmental improvement property.
Under the bill, the term “hydropower environmental improvement property” means property the purpose of which is to: (1) add or improve safe and effective fish passage, including new or upgraded turbine technology, fish ladders, fishways, or other fish passage technology with respect to a qualified dam; (2) maintain or improve the quality of the water retained or released by a qualified dam, or (3) promote downstream sediment transport processes and habitat maintenance with respect to a qualified dam.
Senate Majority Leader Chuck Schumer, D-N.Y., has said he hopes to bring the bill to a vote in the Senate before December 25 and under the budget reconciliation process.
Under such a process, the bill would require only a simple majority to pass. It remains unclear whether Senate Energy and Natural Resources Committee Chairman Joe Manchin, D-W.Va, and Senator Kyrsten Sinema, D-Ariz., support the bill as currently drafted.
Voters Overwhelmingly Approve Net Zero Energy Revenue Bond For Burlington Electric Department
December 8, 2021
by Paul Ciampoli
APPA News Director
December 8, 2021
Voters in Burlington, Vermont, on Dec. 7 overwhelmingly approved a $20 million Net Zero Energy Revenue Bond for public power utility Burlington Electric Department with 70% of voters supporting the ballot measure.
Largely cost neutral to ratepayers, the Net Zero Energy Revenue Bond will allow Burlington Electric Department to continue and expand green stimulus incentives that have helped Burlington residents switch to electric vehicles (EVs) and cold-climate heat pumps, the utility noted.
The bond also will support grid updates for reliability, technology systems to better serve customers, and new EV charging stations.
“Through this bond, we’ll continue and expand our efforts to support our customers in switching from fossil fuels to clean technologies such as electric vehicles, cold-climate heat pumps, and more,” said Darren Springer, General Manager of Burlington Electric Department, in a statement.
The vote “not only moves us toward a Net Zero Energy future but also offers a compelling financing model for other public power utilities around the nation to consider as we all look to meet our climate commitments,” he said.
Additional information about the bond is available here.
Calif. CCAs Issue First Ever Clean Energy Bonds Valued At More Than $2 Billion
December 6, 2021
by Paul Ciampoli
APPA News Director
December 6, 2021
Three California community choice aggregators (CCAs) have issued California’s first ever municipal non-recourse Clean Energy Project Revenue Bonds through the California Community Choice Financing Authority (CCCFA). The two separate bond issuances are valued at over $2 billion for thirty-year terms.
The three CCAs are East Bay Community Energy, Marin Clean Energy (MCE) and Silicon Valley Clean Energy. The two Clean Energy Project Revenue Bonds will prepay for the purchase of over 450 megawatts of renewable energy.
These transactions will reduce renewable power costs by almost $7 million annually for the first 5-10 years, according to the CCAs.
They noted that a Clean Energy Project Revenue Bond is a form of wholesale electricity prepayment that requires three key parties: a tax-exempt public electricity supplier (the CCA), a taxable energy supplier, and a municipal bond issuer.
The CCAs enter into long-term power supply agreements for clean electricity sources like solar, wind, geothermal, and hydropower.
The municipal bond issuer — in this case, CCCFA — issues tax-exempt bonds to fund a prepayment of energy that is to be delivered over 30 years. The energy supplier utilizes the bond funds and provides a discount to the CCA on the power purchases based on the difference between the taxable and tax-exempt rates. This discount is historically in the range of 8-12%, and minimum discounts are negotiated for each transaction.
The first of these bonds, which was issued by CCCFA for the benefit of East Bay Community Energy and Silicon Valley Clean Energy, was underwritten by Morgan Stanley. It successfully generated nearly $1.5 billion in proceeds, after having received an investment grade “A1” rating from Moody’s Investors Service and a “Green Climate Bond” designation from Kestrel Verifiers, making it the largest ever issuance of prepayment bonds for clean electricity.
The second transaction, issued by CCCFA for the benefit of MCE, was underwritten by Goldman Sachs. The bond sale produced approximately $700 million in bond proceeds. The issue received an investment grade “A2” rating from Moody’s and a “Green Climate Bond” designation from Kestrel Verifiers.
CCCFA was established in 2021 with the goal of reducing the cost of power purchases for member CCAs through pre-payment structures. The founding members of CCCFA include Central Coast Community Energy, East Bay Community Energy (EBCE), MCE, and Silicon Valley Clean Energy.
EBCE is a not-for-profit public agency that operates a community choice energy program for Alameda County and fourteen incorporated cities, serving more than 1.7 million residential and commercial customers.
MCE provides electricity service and programs to more than 540,000 customer accounts and more than one million residents and businesses in 37 member communities across four Bay Area counties: Contra Costa, Marin, Napa, and Solano.
Silicon Valley Clean Energy provides electricity from renewable and carbon-free sources to more than 270,000 residential and commercial customers in 13 Santa Clara County jurisdictions.
The American Public Power Association has initiated a new category of membership for community choice aggregation programs.
Ditto Urges Senate To Retain Direct Pay Energy Tax Credit Provisions
December 1, 2021
by Paul Ciampoli
APPA News Director
December 1, 2021
The U.S. Senate should keep the provisions of the Build Back Better Act that will ensure that all electric utilities and their customers benefit from tax incentives encouraging investments to transition to cleaner energy technologies, investments that are needed to reduce greenhouse gas emissions, Joy Ditto, President and CEO of the American Public Power Association (APPA) said in a Nov. 30 letter to Sen. Ron Wyden, D-Ore.
“Similar to the direct pay provisions of your Clean Energy for America Act (S. 2118), enactment would mean that all utilities, not just for-profit utilities, can directly benefit from these energy tax credits,” wrote Ditto in her letter. “This will make these incentives fairer and more effective.”
Wyden is Chairman of the Senate Committee on Finance.
Ditto noted that federal tax expenditures are the primary tools that Congress uses to incentivize energy-related investments.
However, tax-exempt entities– including public power utilities, rural electric cooperatives, and other not-for-profit entities — cannot directly claim such incentives.
“In effect, not-for-profit utilities serving nearly 30 percent of utility customers in the U.S. are effectively locked out of owning facilities being incentivized by such credits – wind, solar, energy storage, etc. This explains why 80 percent of the nation’s (non-hydropower) renewable energy generating capacity is owned by merchant, for-profit, generators,” Ditto said.
The Build Back Better Act (H.R. 5376) addresses this inequity by allowing the direct payment of energy tax credits – including production, investment, and carbon capture tax credits – to any entity that owns the project, she went on to say in the letter.
“This would remove the financial disincentive for public power utilities to own such facilities, which are needed to transition to cleaner energy technologies needed to address climate change. It would also allow the full value of these credits to pay for additional clean energy investments that will benefit the more than 90 million Americans nationwide served by tax-exempt, not-for-profit electric utilities,” wrote Ditto.
“We strongly encourage Congress to take the steps needed to make these tax credits both more effective and more equitable for public power utilities and the communities they serve.”
The House passed the Build Back Better Act in November, sending it to the Senate for consideration. Senate Majority Leader Charles Schumer, D-N.Y., has indicated that he would like the Senate to take up the reconciliation bill in December.