(RICHLAND, WA) – Pacific Northwest ratepayers recently
became the beneficiaries of a regional cooperation debt agreement that will
generate more than $100 million dollars in rate case savings. This agreement
supports the long-term financial viability of the power system, while preserving
Bonneville Power Administration’s (BPA) borrowing authority for future projects
that will benefit the region.
The Energy Northwest Executive Board ratified the agreement
with a majority vote during its monthly meeting on June 26 in Portland. Energy
Northwest Vice President of Corporate Services and Chief Financial Officer
Brent Ridge said that the agreement includes debt refinancing of three Energy
Northwest assets.
“Last week’s ratification is the first of several
opportunities for our executive board to consider debt restructuring as
additional bonds mature in coming years. The restructuring of debt creates at
least $100 million dollars of savings, with, again, future potential for even
greater savings,” said Ridge.
During the meeting, the executive board approved extension
of up to $6 million of fiscal 2016-2017 bonds and up to $321 million of fiscal
2014 bonds on agency assets.
Bonneville and Energy Northwest previously entered into a
debt optimization agreement to refinance debt on agency projects in 2001,
replenishing Bonneville borrowing authority.
Now considered regional cooperation debt, restructuring the
current debt enables BPA to repay an equal amount of its federal repayment
obligations within a reasonable amount of time to reduce overall debt service
costs and to replenish current U.S. Treasury borrowing authority.
“This overall agreement will provide substantial real-world
savings to BPA’s ratepayers in the Northwest,” said Nancy Mitman, BPA executive
vice president for Financial Services and chief financial officer.
According to Ridge, the agreement preserves low-cost access
to capital to create value for ratepayers. “The two agencies worked closely to
establish and implement a broad view of the regional debt portfolio as a
crucial tool for providing the region with prudent, long-term value,” Ridge
said.
“This is the first step of a potential series of agreements
that offers unique opportunities for savings,” said Mitman. “The net effect of
refinancing through regional cooperation bonds is that both the weighted
average interest rate and maturity of BPA’s overall debt portfolio will be
reduced as a result of this agreement, thereby lowering interest costs by
hundreds of millions of dollars and increasing regional borrowing capacity for
infrastructure investment.”
During the 11-year lifespan of the EN/BPA Debt Optimization
Program that began in 2001, BPA restored $2 billion in Treasury borrowing
authority. BPA’s aggregate, weighted average interest rate decreased by one
percent, saving $500 million in interest expenses for ratepayers.
“In fact, we have been working very closely with Energy
Northwest for more than 25 years to provide enormous financial value to the
region through coordinated management of debt issued by Energy Northwest,” said
Mitman. “These mutually supported debt management actions have reduced pressure
on BPA’s revenue requirements and rates innumerable times.”
Energy Northwest credits the success of the most recent
agreement to its public power member utilities and BPA, as well as several
other organizations, including the Public Power Council, Northwest Requirements
Utilities, Public Generating Pool, and PNGC Power.
“We thank all of the regional supporters who continue to
advocate for a safe, low-cost, and reliable power supply,” Ridge said.
