Bonds and Financing

SMMPA completes $26 mil bond issuance for line investment

Southern Minnesota Municipal Power Agency (SMMPA) completed a $26 million issuance on October 8, 2019, putting in place long-term financing for the agency’s investment in the Badger-Coulee transmission line, which was energized in December of 2018.

The 161-mile, 345-kilovolt transmission line from the Briggs Road Substation north of La Crosse, Wisconsin, to northern Dane County near Madison, Wisconsin, addresses electric system reliability issues locally and in the Midwest, providing economic savings and supports renewable energy policy, SMMPA said on Nov. 1.

SMMPA was able to invest in the line based on its earlier participation in the broader CapX2020 initiative to expand transmission infrastructure in the upper Midwest.

The recent $26 million financing marks the first time SMMPA utilized project financing, allowing SMMPA members Austin and Rochester to continue project participation in the transmission line post 2030 when their current power supply agreements expire, SMMPA noted. SMMPA issued tax-exempt debt for the transmission line financing.

As part of the bond issuance process, SMMPA met with the various rating agencies. 

Fitch Ratings upgraded SMMPA’s power supply system revenue bonds to “AA-“ from “A+” in September based on SMMPA’s strong financial profile. The outlook for the rating is “Stable.”

SMMPA is now one of only five joint action agencies to have this rating from Fitch. S&P and Moody’s affirmed their current ratings of A+ and A1, respectively.

Based on SMMPA’s strong financial position, the agency was able to put the long-term Badger-Coulee financing in place at an all-in true interest rate of 2.2%, the lowest rate in SMMPA’s history, it said.

SMMPA generates and transmits wholesale electricity to its 18 nonprofit, municipally-owned member utilities in Minnesota. It also provides programs and services to help its members’ customers use energy wisely.