Campbell B Community Solar FF Slides
Electric Cooperative Industry •
837 Distribution Cooperatives: An electric cooperative that operates a distribution system, purchases wholesale power and delivers it to consumers.
•
71 Generation & Transmission (G&T) Cooperatives: A wholesale power supply cooperative owned by a group of electric distribution cooperatives and sometimes other entities (like municipal electric systems). G&Ts produce power and/or purchase it from a variety of sources. Annual Growth in kWh Sold 6% 4% 2% 0% -2% -4%
Source: NRECA
Co-ops
CY2008 1.22%
CY2009 -1.06%
CY2010 4.80%
CY2011 -0.13%
CY2012 -2.02%
Industry
-0.84%
-3.64%
4.26%
-0.75%
-1.68%
Source: KRTA and EIA data
Electric Cooperatives • • • • • • •
Not for Profit, Non-Taxable Owned by members, Governed by elected Board Defined franchise areas; minimal opt-in for choice Focused on electric service Dedicated power supplier(s), hydro entitlements Assured source(s) of financing – CFC, RUS Generally not rate-regulated (except some states)
Electric Cooperative Background • Residential sales dominate (typically 60 to 70% +). • Most distribution co-ops get power from their owned-G&T. • Wholesale power contracts are long dated, cover all-requirements and provide for full recovery of costs. • Wholesale power contracts allow distribution cooperatives to source some of their power (5/10% of needs or specified KWs). • Almost 30 G&Ts are rated, Most are rated A to A• Many G&Ts have indentures and market access for capital • Few distribution co-ops have sought ratings or market access for capital.
Cooperatives have strong Credit Fundamentals
Electric Cooperative Credit Strength TIER
Modified DSC (MDSC)
2.70
2.62
2.60
2.30
1.95
1.95 2.45
2.50 2.40
2.00
2.40
1.90
2.42
1.85
2.30
1.81
1.81
2011
2012
2013
0.15%
0.14%
2012
2013
1.80
2.20
1.75
2.10
1.70
2009
2010
2011
2012
2013
2009
Equity as a % of assets 43.50%
42.95%
43.00%
43.00%
0.25% 0.20% 0.20%
0.18%
0.17%
0.15%
41.78%
42.00%
2010
% of Write Offs
42.32%
42.50% 41.50%
1.87
1.85
41.26%
0.10%
41.00% 0.05%
40.50% 40.00%
0.00% 2009
Data Source: CFC
2010
2011
2012
2013
2009
2010
2011
Distribution Electric Cooperative Credit Ratings Cooperative
State
Type
Credit Ratings (S&P/Moody's/Fitch) Outlook
Brunswick E.M.C. Chugach Electric CoServ Electric Delaware Electric Cooperative, Inc. Diverse Power Guadalupe Valley Elec Lakeview Light & Power Overton Power District #5 Sulphur Springs Valley Electric Vermont Electric
NC AK TX DE GA TX WA NV AZ VT
DIST DIST DIST DIST DIST DIST DIST DIST DIST DIST
A// A-//A //AAA// A// A+//AA/Baa2/ /Baa1/BBB+ A-//AA//BBB+
(As of 2/28/2014; Source: CFC, S&P, Moody’s, Fitch)
Stable/Not Rated/Not Rated Stable/Not Rated/Stable Not Rated/Not Rated/Stable Stable/Not Rated/Not Rated Stable/Not Rated/Not Rated Positive/Not Rated/Stable Not Rated/Stable/Not Rated Not Rated/Negative/Negative Stable/Not Rated/Stable Stable/Ratings Withdrawn/Stable
Generation & Transmission Electric Cooperative Credit Ratings Cooperative Arkansas Electric Associated Electric Basin Electric Power Big Rivers Electric Corp. Brazos Electric Brazos Sandy Creek Buckeye Power, Inc. Central Electric Central Iowa Power Corn Belt Power Dairyland Power East Kentucky Power Georgia Transmission Corp. Golden Spread Elec Great River Energy Hoosier Energy Kansas Electric Minnkota Power Cooperative North Carolina Electric Oglethorpe Power Old Dominion Electric
State AR MO ND KY TX TX OH SC IA IA WI KY GA TX MN IN KS ND NC GA VA
Type G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T
Credit Ratings (S&P/Moody's/Fitch) AA/A1/A+ AA/A2/AAA/A2/A+ BB-/Ba2/BB A//A A// A-/A3/A AA-// A//A A//AA/A3/NR BBB//BBB+ AA-/A2/AAA/A3/A A-/Baa1/AA/Baa1/ A+// A-/Baa2/ A-//AA/Baa2/A A/A2/A
Outlook Stable/Positive/Stable Stable/Positive/Stable Stable/Stable/Stable Negative/Negative/Negative Stable/Not Rated/Stable Stable/Not Rated/Not Rated Stable/Stable/Negative Stable/Not Rated/Not Rated Stable/Not Rated/Stable Stable/Not Rated/Stable Stable/Stable/Not Rated Positive/Not Rated/Stable Stable/Stable/Stable Stable/Stable/Stable Stable/Stable/Stable Stable/Positive/Not Rated NM/Not Rated/Not Rated Stable/Stable/Not Rated Stable/Not Rated/Stable Stable/Stable/Negative Stable/Stable/Stable
PowerSouth Energy
AL
G&T
A-/Baa1/A-
Stable/Stable/Stable
Rayburn Country Electric San Miguel Electric Seminole Electric South Mississippi Electric South Texas EC Southern Illinois Power Square Butte Electric Tri-State Generation Wabash Valley Power
TX TX FL MS TX IL ND CO IN
G&T G&T G&T G&T G&T G&T G&T G&T G&T
A-// A-//AA-/A3/ A-/Baa1/AA-//ABBB//BBB A-/Baa1/ A/A3/A A-//
Stable/Not Rated/Not Rated Stable/Not Rated/Stable Stable/Stable/Not Rated Stable/Stable/Stable Stable/Not Rated/Stable Stable/Not Rated/Stable Stable/Stable/Not Rated Stable/Stable/Stable Stable/Not Rated/Not Rated
Western Farmers
OK
G&T
A-//A-
Stable/Not Rated/Stable
(As of 2/28/2014; Source: CFC, S&P, Moody’s, Fitch)
2013 Median Cooperative Metrics • Distribution Systems (815 systems) – – – – – –
Revenue Total Assets KWh Growth TIER Equity Blended Interest Cost
$32.4 million $75.3 million 3.13% 2.62 43.0% 4.47%
• Generation and Transmission Systems (43 systems)* – – – – – –
Revenue Total Assets KWh Growth TIER Equity Blended Interest Cost
$505.7 million $231.1 million 2.92% 1.65 22.29% 4.44%
Coops are focused on member engagement and member-satisfaction
Coops are natural-fit for dispersed generation and community solar
Coops have access to a variety of funding options suitable for solar deployment
Coops operate under long dated wholesale power contracts
Coop needs are generally small and they like to own generation sources
Coops operate predominantly as notfor- profit and non-taxable entities – creative approaches are needed to harness tax benefits
Clean Renewable Energy Bonds US Treasury
Private Lender Application for NCREBS
Loan
Allocation
Debt Service P&I
Interest Subsidy
Cooperative Solar Project
Partnership Structure for Cooperatives’ Renewable Power Projects Long Term PPA
Cooperative utility Distributions
Distributions
WhollyOwned
Retail Sales
Blocker Corporation (Taxable)
Utility Consumers
Equity
SPE
Equity
(Pass through entity)
Tax equity Investor
Renewable Power Project
Note *: The SPE is owned by the coop through a taxable “blocker” Corporation”. The SPE is a
“disregarded” entity that distributes all the costs and benefits to the owners.
Coop Solution – Standardization and Efficient Deployment
• Standardized Documentation: – – – –
LLC Operating Agreement for SPE Long term Power Purchase Agreement Operations and Management Agreement Site lease or easement agreement
• Efficient deployment – standardized project design – pipeline of similarly designed projects – Marshall as a fund or master agreement
837 Distribution Cooperatives: An electric cooperative that operates a distribution system, purchases wholesale power and delivers it to consumers.
•
71 Generation & Transmission (G&T) Cooperatives: A wholesale power supply cooperative owned by a group of electric distribution cooperatives and sometimes other entities (like municipal electric systems). G&Ts produce power and/or purchase it from a variety of sources. Annual Growth in kWh Sold 6% 4% 2% 0% -2% -4%
Source: NRECA
Co-ops
CY2008 1.22%
CY2009 -1.06%
CY2010 4.80%
CY2011 -0.13%
CY2012 -2.02%
Industry
-0.84%
-3.64%
4.26%
-0.75%
-1.68%
Source: KRTA and EIA data
Electric Cooperatives • • • • • • •
Not for Profit, Non-Taxable Owned by members, Governed by elected Board Defined franchise areas; minimal opt-in for choice Focused on electric service Dedicated power supplier(s), hydro entitlements Assured source(s) of financing – CFC, RUS Generally not rate-regulated (except some states)
Electric Cooperative Background • Residential sales dominate (typically 60 to 70% +). • Most distribution co-ops get power from their owned-G&T. • Wholesale power contracts are long dated, cover all-requirements and provide for full recovery of costs. • Wholesale power contracts allow distribution cooperatives to source some of their power (5/10% of needs or specified KWs). • Almost 30 G&Ts are rated, Most are rated A to A• Many G&Ts have indentures and market access for capital • Few distribution co-ops have sought ratings or market access for capital.
Cooperatives have strong Credit Fundamentals
Electric Cooperative Credit Strength TIER
Modified DSC (MDSC)
2.70
2.62
2.60
2.30
1.95
1.95 2.45
2.50 2.40
2.00
2.40
1.90
2.42
1.85
2.30
1.81
1.81
2011
2012
2013
0.15%
0.14%
2012
2013
1.80
2.20
1.75
2.10
1.70
2009
2010
2011
2012
2013
2009
Equity as a % of assets 43.50%
42.95%
43.00%
43.00%
0.25% 0.20% 0.20%
0.18%
0.17%
0.15%
41.78%
42.00%
2010
% of Write Offs
42.32%
42.50% 41.50%
1.87
1.85
41.26%
0.10%
41.00% 0.05%
40.50% 40.00%
0.00% 2009
Data Source: CFC
2010
2011
2012
2013
2009
2010
2011
Distribution Electric Cooperative Credit Ratings Cooperative
State
Type
Credit Ratings (S&P/Moody's/Fitch) Outlook
Brunswick E.M.C. Chugach Electric CoServ Electric Delaware Electric Cooperative, Inc. Diverse Power Guadalupe Valley Elec Lakeview Light & Power Overton Power District #5 Sulphur Springs Valley Electric Vermont Electric
NC AK TX DE GA TX WA NV AZ VT
DIST DIST DIST DIST DIST DIST DIST DIST DIST DIST
A// A-//A //AAA// A// A+//AA/Baa2/ /Baa1/BBB+ A-//AA//BBB+
(As of 2/28/2014; Source: CFC, S&P, Moody’s, Fitch)
Stable/Not Rated/Not Rated Stable/Not Rated/Stable Not Rated/Not Rated/Stable Stable/Not Rated/Not Rated Stable/Not Rated/Not Rated Positive/Not Rated/Stable Not Rated/Stable/Not Rated Not Rated/Negative/Negative Stable/Not Rated/Stable Stable/Ratings Withdrawn/Stable
Generation & Transmission Electric Cooperative Credit Ratings Cooperative Arkansas Electric Associated Electric Basin Electric Power Big Rivers Electric Corp. Brazos Electric Brazos Sandy Creek Buckeye Power, Inc. Central Electric Central Iowa Power Corn Belt Power Dairyland Power East Kentucky Power Georgia Transmission Corp. Golden Spread Elec Great River Energy Hoosier Energy Kansas Electric Minnkota Power Cooperative North Carolina Electric Oglethorpe Power Old Dominion Electric
State AR MO ND KY TX TX OH SC IA IA WI KY GA TX MN IN KS ND NC GA VA
Type G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T G&T
Credit Ratings (S&P/Moody's/Fitch) AA/A1/A+ AA/A2/AAA/A2/A+ BB-/Ba2/BB A//A A// A-/A3/A AA-// A//A A//AA/A3/NR BBB//BBB+ AA-/A2/AAA/A3/A A-/Baa1/AA/Baa1/ A+// A-/Baa2/ A-//AA/Baa2/A A/A2/A
Outlook Stable/Positive/Stable Stable/Positive/Stable Stable/Stable/Stable Negative/Negative/Negative Stable/Not Rated/Stable Stable/Not Rated/Not Rated Stable/Stable/Negative Stable/Not Rated/Not Rated Stable/Not Rated/Stable Stable/Not Rated/Stable Stable/Stable/Not Rated Positive/Not Rated/Stable Stable/Stable/Stable Stable/Stable/Stable Stable/Stable/Stable Stable/Positive/Not Rated NM/Not Rated/Not Rated Stable/Stable/Not Rated Stable/Not Rated/Stable Stable/Stable/Negative Stable/Stable/Stable
PowerSouth Energy
AL
G&T
A-/Baa1/A-
Stable/Stable/Stable
Rayburn Country Electric San Miguel Electric Seminole Electric South Mississippi Electric South Texas EC Southern Illinois Power Square Butte Electric Tri-State Generation Wabash Valley Power
TX TX FL MS TX IL ND CO IN
G&T G&T G&T G&T G&T G&T G&T G&T G&T
A-// A-//AA-/A3/ A-/Baa1/AA-//ABBB//BBB A-/Baa1/ A/A3/A A-//
Stable/Not Rated/Not Rated Stable/Not Rated/Stable Stable/Stable/Not Rated Stable/Stable/Stable Stable/Not Rated/Stable Stable/Not Rated/Stable Stable/Stable/Not Rated Stable/Stable/Stable Stable/Not Rated/Not Rated
Western Farmers
OK
G&T
A-//A-
Stable/Not Rated/Stable
(As of 2/28/2014; Source: CFC, S&P, Moody’s, Fitch)
2013 Median Cooperative Metrics • Distribution Systems (815 systems) – – – – – –
Revenue Total Assets KWh Growth TIER Equity Blended Interest Cost
$32.4 million $75.3 million 3.13% 2.62 43.0% 4.47%
• Generation and Transmission Systems (43 systems)* – – – – – –
Revenue Total Assets KWh Growth TIER Equity Blended Interest Cost
$505.7 million $231.1 million 2.92% 1.65 22.29% 4.44%
Coops are focused on member engagement and member-satisfaction
Coops are natural-fit for dispersed generation and community solar
Coops have access to a variety of funding options suitable for solar deployment
Coops operate under long dated wholesale power contracts
Coop needs are generally small and they like to own generation sources
Coops operate predominantly as notfor- profit and non-taxable entities – creative approaches are needed to harness tax benefits
Clean Renewable Energy Bonds US Treasury
Private Lender Application for NCREBS
Loan
Allocation
Debt Service P&I
Interest Subsidy
Cooperative Solar Project
Partnership Structure for Cooperatives’ Renewable Power Projects Long Term PPA
Cooperative utility Distributions
Distributions
WhollyOwned
Retail Sales
Blocker Corporation (Taxable)
Utility Consumers
Equity
SPE
Equity
(Pass through entity)
Tax equity Investor
Renewable Power Project
Note *: The SPE is owned by the coop through a taxable “blocker” Corporation”. The SPE is a
“disregarded” entity that distributes all the costs and benefits to the owners.
Coop Solution – Standardization and Efficient Deployment
• Standardized Documentation: – – – –
LLC Operating Agreement for SPE Long term Power Purchase Agreement Operations and Management Agreement Site lease or easement agreement
• Efficient deployment – standardized project design – pipeline of similarly designed projects – Marshall as a fund or master agreement
