Clean Power Alliance Issues Third Pre-Pay Green Bond Further Lowering Renewable Energy Costs
September 12 2024 - 11:00AM
Clean Power Alliance (CPA), California’s largest Community Choice
Aggregator serving more than three million residents and businesses
throughout Los Angeles and Ventura counties, has issued its third
municipal non-recourse Clean Energy Project Revenue Bond through
the California Community Choice Financing Authority (CCCFA).
The $1.524 billion bond
issuance is expected to reduce CPA’s renewable energy costs by an
estimated $93 million over the initial eight-year period of the
bond, or an average of $11.6 million annually.
The savings from this
prepay transaction are locked in until 2032, at which time the bond
will be repriced. The bond received an investment-grade A1 rating
from Moody’s and a ‘Green Bonds’ designation by Kestrel
Verifiers.
CPA issued its first two
Clean Energy Project Revenue bonds in February 2023 and April 2023,
respectively. The three bond issuances are expected to generate
total annual savings of approximately $25.3
million.
“Clean Power Alliance is
pleased to issue its third clean energy bond and lower our energy
costs,” said David McNeil, Clean Power Alliance’s Chief Financial
Officer. “Lowering energy costs frees up resources to serve our
customers through innovative programs and by offering competitive
rates. We look forward to issuing additional clean energy
bonds while continuing to look for innovative mechanisms to provide
affordable clean energy to the dozens of communities we
serve.”
Energy prepayment bonds
are long-term financial transactions available to public agencies
like CPA to provide power procurement cost savings.
“As a not-for-profit
public agency, CPA is structured to benefit its customers and
invest revenues into customer programs, workforce development, and
strengthening critical infrastructure,” said Susan Santangelo,
Chair of CPA’s Finance Committee and City of Camarillo
Councilmember. “CPA is able to leverage its tax-exempt status to
reduce power costs, which can help mitigate rising electricity
bills.”
A Clean Energy Project
Revenue Bond is a form of wholesale electricity prepayment that
requires three key parties: a tax-exempt public electricity
retailer (CPA in this transaction), a taxable energy supplier (J
Aron & Company, LLC in this transaction), and a municipal bond
issuer (CCCFA in this transaction).
The three parties then
enter into long-term power supply agreements for zero-emission
clean electricity sources such as solar, wind, geothermal, and
hydropower. The municipal bond issuer issues tax-exempt bonds
(underwritten by Goldman Sachs in this transaction) to fund a
prepayment of energy that will be delivered over 30
years.
The energy supplier
provides a discount to the tax-exempt public electricity retailer
in exchange for the prepayment of power purchases funded by the
bond proceeds.
CPA has assigned three
solar-plus-storage power purchase agreements (PPAs) to this prepay
transaction. The bond will be utilized to prepay the purchase of a
combined capacity of 854.5 megawatts (MW) of renewable energy. This
is enough clean energy to avoid more than 775 million pounds of
harmful greenhouse gas emissions annually, and power more than
225,000 Southern California homes per year.
For the bond, CPA was
advised by municipal financial advisor Municipal Capital Markets
Group and by the law firm Chapman & Cutler.
About Clean Power
Alliance Founded in 2017, Clean Power Alliance is the
locally operated not-for-profit electricity provider for 33 cities
across Los Angeles County and Ventura County, as well as the
unincorporated areas of both counties. CPA is the fourth largest
electricity provider in California and the number one green power
provider in the United States. CPA serves approximately three
million residents and businesses, providing clean renewable energy
at competitive rates. To view CPA’s 2023 Impact Report, click here.
For complete information regarding CPA visit
http://www.cleanpoweralliance.org.
Joseph Cabral
Clean Power Alliance
213-442-8109
jcabral@cleanpoweralliance.org