Item 2C: EWEB Short-Term Borrowing

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environmental attributes of renewable projects such as Harvest Wind. The Harvest Wind Project will help EWEB obtain compliance with this standard. Given current energy market conditions, the Harvest Wind Project is expected to provide long-term economic value as well. In regard to the current actions requested, there are two financing mechanisms authorized in the proposed resolutions (items 2C and 2D on the council calendar). With the first resolution, EWEB would enter into a line of credit agreement for the Electric Utility System for a maximum amount of $46,355,000. The line of credit would provide EWEB the short-term financing for its share of the construction costs of the project. Over the next few months, the goal is to obtain a private investor that would buy the project and receive the tax benefits. As a result, EWEB would then pay down the line of credit from the proceeds received from the private investor. If a private investor cannot be found, the back-up plan is to use revenue bonds previously authorized by the voters to provide long-term financing for the project. The second resolution authorizes issuance of Electric Utility System Refunding Revenue Bonds in the amount of $46,355,000. On February 17, 1993, the council adopted Resolution No. 4360 authorizing the issuance and sale of Electric System Revenue Bonds in an aggregate amount not to exceed $150,000,000 for the acquisition of certain improvements to the electric system. On May 18, 1993, voters approved issuance of the like amount of bonds for electricity generation, acquisition of energy conservation, and the purchase and acquisition of transmission capability. Of the amount authorized, $103,645,000 has been issued to-date. The bond resolution under council item 2D sets terms and conditions by which the council would authorize the issuance of the $46,355,000 remaining under the $150 million authorization. The bond proceeds would be used to pay off the line of credit and/or to enter into a long-term contract for the pre- purchase of wind power or for financing the acquisition of a share in the Harvest Wind Project over a longer period of time in the event a private investor cannot be secured. The proposed financings could have an impact on electric rates. The retail rate impact will be two percent or less based on a worst-case scenario for wholesale power prices. If a tax partner is ultimately obtained, the rate effect would be reduced to zero. RELATED CITY POLICIES There are no City policies related to this item. COUNCIL OPTIONS The council can approve or not approve this resolution. If the council does not approve the resolution, EWEB would not be able to issue a line of credit to finance the construction of the wind project and EWEB would reassess its involvement in the project. CITY MANAGER’S RECOMMENDATION The City Manager recommends approval of the resolution. Z:\CMO\2009 Council Agendas\M090511\S0905112C.doc