Plum Point Project Municipal Energy Agency of Mississippi Geoffrey Wilson Executive Director.
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Transcript of Plum Point Project Municipal Energy Agency of Mississippi Geoffrey Wilson Executive Director.
![Page 1: Plum Point Project Municipal Energy Agency of Mississippi Geoffrey Wilson Executive Director.](https://reader035.fdocuments.us/reader035/viewer/2022062618/5514817f550346ea6e8b49cc/html5/thumbnails/1.jpg)
Plum Point ProjectMunicipal Energy Agency of
MississippiGeoffrey WilsonExecutive Director
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MEAM
•Joint Action Agency
•Municipal utility members
•undivided 6% interest
•$103 mm bond issue
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MEAM
•MEAM used convertible PPA
•Power purchase agreement with right to convert to equity
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Other partners
• East Texas Electric Coop• LSP• Missouri Joint Action Agency• Empire (IOU)• Arkansas munis - select
• Other buyers• SMEPA
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• “Culture Clash” between:– 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
Diverse participants
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• Longer financing timeline– Public notice
• Require more definitive transmission timeline– Lower risk threshold
JAA/Muni’s
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• 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
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• MEAM had 60 days after developer closing to convert.
• MEAM had 90 days after conversion to achieve financing
Attributes
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• 30 days between transmission answer and financial close
• Not enough time to ramp up bond financing effort
• Can’t “pre-do” public notice process
Critical Decision Point
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• 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
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• Bridge financing alternative– Interest rates
• Conversion – financing “breakage” fees– Interest rate swaps
• PPA still attractive
Trade-offs
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• PPA– Higher imbedded interest rate– Lower construction risk
• Ownership– Lower cost– Asset life
PPA/Ownership trade-offs
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• Not rushed– Make sure all parties are aware of:– Obligations– Costs– Economics– Contingencies
• All MEAM and municipal approvals were unanimous.
Time
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• 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..
Muni Bond Closing
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Bond Buyer Magazine
November 2006