(PORTLAND, OR) -- Energy Northwest and the Bonneville Power Administration took the first step in an effort that could save BPA ratepayers as much as $1.8 billion in gross interest savings and restore up to $1.2 billion of BPA’s U.S. Treasury borrowing authority through 2044.
In particular, Energy Northwest sold BPA-supported bonds on Aug. 5 to refinance approximately $321 million of outstanding regional cooperation debt previously issued by Energy Northwest and associated with the never-completed nuclear Projects 1 and 3. This is the first of several potential bond sales that could lead to the refinancing of Energy Northwest nuclear assets that could yield the savings mentioned above.
“This agreement offers unique opportunities for savings,” said Nancy Mitman, BPA acting chief financial officer. “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 over the life of the proposal, thereby lowering interest costs by hundreds of millions of dollars and increasing U.S Treasury borrowing capacity for making much-needed investments in our infrastructure.”
Regional cooperation debt refers to existing debt associated with the Columbia Generating Station in Richland, Wash., and Projects 1 and 3 that also serves as a regional financial resource, providing remarkable debt management opportunities to lower costs of power for the benefit of the Pacific Northwest.
Similar efforts in the past helped BPA preserve and restore approximately $2 billion in U.S. Treasury borrowing authority and saved approximately $500 million in interest under BPA’s Debt Optimization Program.
The bond proceeds will be used to pay off Energy Northwest debt that is due to mature in 2014. The new bonds will be paid prior to the end of BPA’s existing regional power sales agreements in 2028. More particularly, the bond sale allows Energy Northwest to extend regional cooperation debt that was due in 2014 into the period between 2025 and 2028, a period that more closely matches the useful lives of the Energy Northwest facilities expected at the time the related facilities were initially financed.