HomeMy WebLinkAbout19 UAMPS Joint Powers Agenda Item # 19
TRUCKEE -.
Public Utility District
WORKSHOP
To: Board of Directors
From: Stephen Hollabaugh
Date: March 18, 2009
Subject: Creation of Joint Powers Agency in Cooperation with UAMPS
1. WHY THIS MATTER IS BEFORE THE BOARD
This item is informational regarding the investigation of a new Joint Powers Agency
(JPA) between UAMPS, Lassen MUD and Truckee Donner PUD.
2. HISTORY
Truckee Donner PUD has an interest in the Nebo natural gas generation project.
Much of the cost of this generation comes from the cost of the fuel (natural gas). If
the fuel cost can be lowered, the overall electric generation costs can be reduced.
3. NEW INFORMATION
Utah Associated Municipal Power Systems (UAMPS) is investigating a natural gas
prepay issue. UAMPS members have interest in the Nebo natural gas project. The
natural gas (fuel) for the plant is a large portion of the cost to operate the plant. If the
cost of natural gas can be reduced, the overall cost of electricity produced would be
reduced.
Issuer for Prepay Bonds would sell bonds while the proceeds would be used to make
Prepayment in exchange for future gas supplies. Issuer would sell the gas to UAMPS
and UAMPS would take responsibility for resale of gas, scheduling, marketing,
tracking and accounting. Issuer assigns all rights to gas revenue to bond trustee to
repay bondholders.
A California issuer has an advantage.
Lower yield on the bonds due to higher state income taxes
Broader market of sophisticated investors
Secondary market transactions demonstrated up to 30 basis points be
prior
to credit crisis
Expected present value benefits can be in the range of $1.5-2.5 million
(estimate by financial analyst, McDonald Partners)
The proposed issuer is a New JPA
California law requires JPA to be made up of public entities
Lassen MUD
Truckee Donner PUD
UAMPS
Each participant would appoint one member to the JPA Board
The JPA Board would authorize Gas Project and bond sale. Prepay investors
have recourse only to the gas revenues.
No ongoing involvement at JPA level. JPA assigns its rights and
responsibilities under the prepay agreement to UAMPS.
An annual JPA audit must be preformed.
4. FISCAL IMPACT
If a new JPA is formed, the financial impact will be paid by UAMPS. No financial
impact will be born by Truckee Donner PUD.
5. RECOMMENDATION
Receive this report and provide comment.
Stephen Hollabaugh Michael D. of ey
Assistant General Manager General Manager