California community choice aggregator Clean Power Alliance has arranged for the issuance of its second municipal non-recourse Clean Energy Project Revenue Bond through the California Community Choice Financing Authority, the CCA said on June 20.
The approximately $1 billion bond issuance is expected to reduce CPA’s renewable energy costs by approximately $31.9 million over the initial five-year period of the bonds, or an average of $6.4 million annually.
The savings from this prepay transaction are locked in until 2028, at which time the bond will be repriced.
The bond received an investment-grade Baa1 rating from Moody’s and a ‘Green Bonds’ designation by Kestrel Verifiers.
CPA arranged for the issuance of its first Clean Energy Project Revenue bond in February 2023.
The combined average annual CPA savings for the two bond issuances total approximately $14.7 million.
A Clean Energy Project Revenue Bond is a form of wholesale electricity prepayment that requires three 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, hydropower, and battery storage.
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 utilizes the bond proceeds and provides a discount to the tax-exempt public electricity retailer in exchange for the prepayment on the respective power purchases. This discount is historically in the range of 8 to 12 percent.
CPA has assigned four power purchase agreements to this prepay transaction, three solar-plus-storage projects, and one wind project.
The bond will be utilized to prepay the purchase of a combined capacity of 685.5 megawatts of clean electricity.
The bond proceeds are $1,001,786,198 and the bonds yield an average of 4.53 percent.
Founded in 2017, Clean Power Alliance is the locally operated not-for-profit electricity provider for 30 cities across Los Angeles County and Ventura County, as well as the unincorporated areas of both counties.
The American Public Power Association has initiated a new category of membership for community choice aggregation programs.