Downtown-based Clean Power Alliance, the fourth-largest electricity provider in California, closed a pre-payment bond transaction for years of wind energy supply valued at $1.4 billion.
The public agency said the deal will reduce renewable energy costs by roughly $91 million over its initial seven-year period, or about $12.7 million a year. J.P. Morgan underwrote the bond – the firm’s first electric prepay deal in the U.S.
Through CPA, Los Angeles and Ventura counties buy and generate renewable energy while Rosemead-based Southern California Edison maintains the power lines, reads meters and sends monthly bills. Prepay bonds are used by public utilities and municipal agencies to pay an energy supplier in advance for a long-term supply of electricity.
“CPA’s prepay strategy is an important tool for delivering on our commitment to provide clean, reliable and affordable energy,” CPA’s chief executive, Ted Bardacke, said in a statement. “By building on the success of previous transactions, we’re able to secure substantial savings that reduce costs while advancing our mission to serve our communities with clean power options at competitive rates.”
Deal logistics
The just-announced prepay bond is CPA’s seventh to date and comes after the agency’s board approved up to $4.5 billion of new prepay deals by the end of next June.
CPA will get roughly 1.14 million megawatt-hours of the highest-tier renewable energy annually for the bond’s first seven years. The power will come from the agency’s portfolio of existing agreements that have a combined capacity of 440.8 megawatts. CPA didn’t disclose the projects from which it will source the energy.
“Reaching ($)8.3 billion in prepay transactions reflects the strength and scalability of this financing strategy,” said David McNeil, CPA’s chief financial officer, in the release. “This latest transaction achieves long-term energy cost savings through strategic financial partnerships, helping us maintain competitive rates while supporting a diverse portfolio of renewable energy resources.”
Earlier this year, CPA inked a 20-year deal with San Diego-based solar and energy storage company Avantus, promising to add enough solar generation and battery energy storage to power 84,000 homes in Southern California. The contracted power will come from a project in Tulare County on which construction is set to start next year before the site becomes operational in late 2028.
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