Item 3C - Resolution Authorizing EWEB Bonds for Carmen-Smith Project

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Adoption of Resolution 5061 Authorizing the Eugene Water & Electric Board to Issue and Sell Electric Utility System Revenue Bonds and Electric Utility Revenue Refunding Bonds Meeting Date: May 29, 2012 Agenda Item Number: 3C Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 541-682-5589 ISSUE STATEMENT The Eugene Water & Electric Board (EWEB) is requesting authority to proceed with the issuance of Electric Utility Revenue Bonds in the amount of $45,000,000 for capital improvements and $38,000,000 for the purpose of refinancing to achieve interest rate savings. BACKGROUND Carmen-Smith Project An authorization for $45,000,000 of Electric Utility System Revenue Bonds is being requested to 1) provide reimbursement of $20 million of project costs paid from reserves over the last several years and 2) provide funds for 2012 and 2013 to continue the relicensing of the Carmen-Smith Hydroelectric Project. The reimbursement of prior year project costs will be placed in reserve to pay for project costs in 2014 and beyond. The Carmen-Smith Hydroelectric Project, which is located 71 miles east of Eugene on the upper McKenzie River, represents almost half of EWEB’s total owned generation capacity. EWEB received an initial federal license for the Carmen-Smith Project in 1958. This 50-year license expired in November of 2008, and EWEB has been operating under an annual license from the Federal Energy Regulatory Commission (FERC) since that time. The annual license renews automatically until EWEB receives a new license for the project from the FERC. The council will receive a presentation on this project at the May 29 work session. EWEB has previously issued $13.4 million in bonds relating to the Carmen-Smith Project and additional project costs from 2012 to the completion of the project are expected to be approximately $156 million. The project will be funded through two additional bond authorizations: $45 million requested at this time, and the remainder to be requested after the license has been approved. EWEB expects rates to increase two percent as a result of issuance of the currently requested bonds. Refunding The City, acting by and through EWEB, issued $12,410,000 Series 2002C and $40,865,000 Series 2003 Electric System Revenue Bonds. The current outstanding balance for these bonds is $8,290,000 and S:\CMO\2012 Council Agendas\M120529\S1205293C.doc