$258,070,000. (a public entity organized under the laws of the State of California)

Transcription

1 NEW ISSUE BOOK-ENTRY ONLY In the opinion of Co-Bond Counsel, under existing law interest on the 2009 Bonds is exempt from personal income taxes of the State of California and, assuming compliance with the tax covenants described herein, interest on the 2009 Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax. See Federal and State Income Taxes herein for a description of certain other tax considerations. $258,070,000 Southern California Public Power Authority (a public entity organized under the laws of the State of California) $146,535,000 Magnolia Power Project A, Refunding Revenue Bonds, CUSIP No E92 $111,535,000 Magnolia Power Project A, Refunding Revenue Bonds, CUSIP No F26 Dated: Date of Delivery Price: 100% Due: July 1, 2036 This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors must read the entire Official Statement to obtain information essential to making an informed investment decision. Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein. The Magnolia Power Project A, Refunding Revenue Bonds, (the Bonds ) and the Magnolia Power Project A, Refunding Revenue Bonds, (the Bonds and, together with the Bonds, the 2009 Bonds ) are being issued by the Southern California Public Power Authority (the Authority ) pursuant to the Indenture of Trust, dated as of March 1, 2003, from the Authority to U.S. Bank National Association, as trustee (the Trustee ), as supplemented and amended (the Indenture of Trust ). The 2009 Bonds are being issued (i) to refund all of the Magnolia Power Project A, Refunding Revenue Bonds, (the 2007 Bonds ), (ii) to fund a debt service reserve account for each Series of 2009 Bonds, (iii) to make a payment to the counterparties under related interest rate swaps identified to the 2007 Bonds to induce substantial modifications thereof and (iv) to pay the costs of issuance relating to the 2009 Bonds. The Authority has reserved the right to issue additional parity bonds and to enter into additional parity swaps under the Indenture of Trust on the terms and conditions and for the purposes stated in the Indenture of Trust. Upon the issuance of the 2009 Bonds and the refunding of the 2007 Bonds, there will be outstanding $85,410,000 of the Authority s Magnolia Power Project A, Revenue Bonds, and $31,535,000 of the Authority s Magnolia Project A, Revenue Bonds, See The Authority s Refunding Plan herein. The 2009 Bonds will be issued in two Series, each of which will initially bear interest at a Weekly Interest Rate to be established by the Remarketing Agent as described herein, until the Interest Rate Period is converted as provided herein. Pursuant to the Indenture of Trust, the 2009 Bonds of each Series may bear interest in a Weekly Interest Rate Period, a Daily Interest Rate Period, a Short-Term Interest Rate Period, a Long-Term Interest Rate Period or an ARS Interest Rate Period. All of the 2009 Bonds of a Series must be in the same Interest Rate Period at the same time. This Official Statement is not intended to describe the 2009 Bonds while in an Interest Rate Period other than the Weekly Interest Rate Period. Owners and prospective purchasers of the 2009 Bonds should not rely on this Official Statement for information in connection with any conversion of a Series of the 2009 Bonds to a different Interest Rate Period, but should look solely to the offering document to be used in connection with any such conversion. While in a Weekly Interest Rate Period, each Series of the 2009 Bonds will be delivered in denominations of $100,000 or any integral multiple of $5,000 in excess of $100,000. During the Weekly Interest Rate Period, interest on each Series of the 2009 Bonds will be payable on the first Wednesday of each calendar month, commencing May 6, 2009, or if the first Wednesday of a calendar month is not a Business Day, the next succeeding Business Day. Each Series of the 2009 Bonds will be issued as fully registered bonds, and when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as securities depository of the 2009 Bonds. Individual purchases of the 2009 Bonds will be made in book-entry form only. Purchasers of the 2009 Bonds will not receive physical certificates representing their interest in purchased 2009 Bonds. Principal of, premium, if any, purchase price and interest on the 2009 Bonds are payable directly to DTC by the Trustee. Upon receipt of payments of such principal, premium, if any, purchase price and interest, DTC is obligated to remit such principal, premium, if any, purchase price and interest to its DTC participants for subsequent disbursement to the beneficial owners of the 2009 Bonds. See Book-Entry Only System herein. The 2009 Bonds of each Series are subject to optional and mandatory tender and optional and mandatory sinking fund redemption prior to maturity as described herein. The 2009 Bonds of each Series are special limited obligations of the Authority payable solely from and secured solely by a pledge and assignment of Project A Revenues and certain other monies described herein. Project A Revenues consist primarily of payments to be made to the Authority by the Project A Participants pursuant to the Project A Power Sales Agreements. The Project A Participants are the California cities of Anaheim, Burbank, Colton, Glendale and Pasadena. Such payments are to include the Project A Generation Cost Shares of the Magnolia Power Project and the Project A Indenture Cost Shares, as described herein. Each Project A Participant has agreed to make its share of such payments solely from its electric system revenues, and such payments constitute operating expenses of the Project A Participants. The payment obligations of the Project A Participants under the Project A Power Sales Agreements are not contingent upon the operation of the Magnolia Power Project or the performance or nonperformance by any party of any agreement for any cause whatsoever. See Security and Sources of Payment for the Bonds herein. The 2009 Bonds are not obligations of the State of California, any public agency thereof (other than the Authority), any member of the Authority or any Project A Participant and neither the faith and credit nor the taxing power of any of the foregoing (including the Authority) is pledged for the payment of the 2009 Bonds. The 2009 Bonds shall never constitute the debt or indebtedness of the Authority within the meaning of any provision or limitation of the Constitution or statutes of the State of California and shall not constitute nor give rise to a pecuniary liability of the Authority or a charge against its general credit. The Authority has no taxing power. Payments of principal and redemption price of and interest on the Bonds will be initially supported by an irrevocable, direct-pay letter of credit (the Letter of Credit ) to be issued in favor of the Trustee for the benefit of the registered owners of the Bonds on the date of delivery thereof by KBC Bank N.V., acting through its New York Branch (the Bank ), upon which the Trustee is instructed to draw to pay such principal and redemption price of and interest on the Bonds. The Trustee may also draw funds under the Letter of Credit to pay the purchase price of the Bonds tendered for payment and not remarketed to the extent other moneys are not available therefor. The Letter of Credit has a scheduled termination date of April 20, 2012, subject to extension or earlier termination under conditions described herein. See The Letters of Credit and Reimbursement Agreements The Letter of Credit and Reimbursement Agreement herein. Payments of principal and redemption price of and interest on the Bonds will be initially supported by an irrevocable, direct-pay letter of credit (the Letter of Credit ) to be issued in favor of the Trustee for the benefit of the registered owners of the Bonds on the date of delivery thereof by Bank of America, N.A. (the Bank ), upon which the Trustee is instructed to draw to pay such principal and redemption price of and interest on the Bonds. The Trustee may also draw funds under the Letter of Credit to pay the purchase price of the Bonds tendered for payment and not remarketed to the extent other moneys are not available therefor. The Letter of Credit has a scheduled termination date of April 20, 2012, subject to extension or earlier termination under conditions described herein. See The Letters of Credit and Reimbursement Agreements The Letter of Credit and Reimbursement Agreement herein. The 2009 Bonds are offered when, as and if issued and received by the Underwriter, and subject to the approval of legality by Fulbright & Jaworski L.L.P., Los Angeles, California, and Curls Bartling P.C., Oakland, California, Co-Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the Authority by its General Counsel, Richard M. Helgeson, Esq., Pasadena, California, for the Underwriter by its counsel, Sidley Austin LLP, San Francisco, California, and for the Bank and the Bank, by their counsel, Chapman and Cutler LLP. Public Financial Management, Inc. is serving as Financial Advisor to the Authority. It is expected that the 2009 Bonds will be available for delivery through the facilities of the DTC book-entry system on or about April 23, Official Statement Dated: April 21, 2009 Citi A registered trademark of The American Bankers Association. CUSIP is provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. CUSIP numbers are provided for convenience of reference only. Neither the Authority nor the Underwriter assumes any responsibility for the accuracy of such numbers.

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3 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY BOARD OF DIRECTORS Marcie L. Edwards (Anaheim) Joseph F. Hsu (Azusa) James D. Earhart (Banning) Ronald E. Davis (Burbank) Art Gallucci (Cerritos) Jeannette Y. Olko (Colton) Glenn O. Steiger (Glendale) Brian Brady (Imperial) H. David Nahai (Los Angeles) Phyllis E. Currie (Pasadena) David H. Wright (Riverside) Donal O Callaghan (Vernon) MANAGEMENT Marcie L. Edwards President Glenn O. Steiger Vice President Leilani Johnson Kowal Secretary Mario C. Ignacio Assistant Secretary Bill D. Carnahan Executive Director, Treasurer/Auditor Craig A. Koehler Finance and Accounting Manager PROJECT A PARTICIPANTS City of Anaheim, California City of Burbank, California City of Colton, California City of Glendale, California City of Pasadena, California TRUSTEE AND PAYING AGENT U.S. Bank National Association Los Angeles, California FINANCIAL ADVISOR Public Financial Management, Inc. San Francisco, California CO-BOND COUNSEL Fulbright & Jaworski L.L.P. Los Angeles, California and Curls Bartling P.C. Oakland, California GENERAL COUNSEL Richard M. Helgeson, Esq. Pasadena, California VERIFICATION AGENT The Arbitrage Group Inc. Brenham, Texas

4 No dealer, broker, salesperson or other person has been authorized by the Southern California Public Power Authority or by Citigroup Global Markets Inc. (the Underwriter ) to give any information or to make any representations, other than as contained in this Official Statement, and if given or made such other information or representations must not be relied upon as having been authorized by the Authority or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2009 Bonds by any person in any jurisdiction in which it is unlawful for such persons to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2009 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly described herein, are intended solely as such and are not to be construed as representations of fact. The information set forth herein has been furnished by the Authority and certain of the Project A Participants and includes information obtained from other sources which are believed to be reliable. The information and expressions of opinion contained herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or any Project A Participant since the date hereof. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. IN CONNECTION WITH THE OFFERING OF THE 2009 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 2009 BONDS AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements are generally identifiable by the terminology used, such as plan, project, expect, anticipate, intend, believe, estimate, budget or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Authority does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which such statements are based occur. The Authority maintains a website. However, the information presented therein is not part of this Official Statement and should not be relied upon in making investment decisions with respect to the 2009 Bonds.

5 TABLE OF CONTENTS Page INTRODUCTION...1 Purpose...1 Authority for Issuance...1 Outstanding Bonds...2 Security and Sources of Payment for the 2009 Bonds...2 Interest Rate Swap Agreements...2 The Letters of Credit and the Reimbursement Agreements...3 Financing of the Project...4 The Authority and the Participants in the Magnolia Power Project...4 Description of the Project and Related Matters...4 Management of the Project...5 Power Sales Agreements...5 Project Site Lease and Services Agreement...8 No Continuing Disclosure...8 Remarketing Agent...8 Certain Relationships...8 Certain Information; Summaries and References to Documents...8 THE AUTHORITY S REFUNDING PLAN...9 ESTIMATED SOURCES AND USES OF FUNDS...9 ESTIMATED DEBT SERVICE REQUIREMENTS...10 DESCRIPTION OF THE 2009 BONDS...10 General...10 Interest Rate Provisions...11 Conversion to Another Interest Rate Period...11 Purchase of 2009 Bonds...13 Redemption Provisions...17 SPECIAL CONSIDERATIONS RELATING TO THE 2009 BONDS...20 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS...21 Pledge Effected by the Indenture of Trust...21 Authority Rate Covenant...22 Flow of Funds...22 Debt Service Reserve Accounts...24 Additional Bonds...25 Budgeting...25 Project A Power Sales Agreements...26 Limitations on Remedies...33 BOOK-ENTRY ONLY SYSTEM...34 General...34 Discontinuation of the Book-Entry Only System...36 THE LETTERS OF CREDIT AND REIMBURSEMENT AGREEMENTS...36 The Letter of Credit and Reimbursement Agreement...36 The Letter of Credit and Reimbursement Agreement...40 i

6 TABLE OF CONTENTS (continued) THE BANKS...43 The Bank...43 The Bank...44 THE REMARKETING AGENT...45 SOUTHERN CALIFORNIA PUBLIC POWER AUTHORITY...46 Formation...46 Organization and Management...46 Other Activities of the Authority...47 Further Information...50 MAGNOLIA POWER PROJECT...51 Operating Agent...51 Fuel Supply...52 Water Supply and Wastewater Discharge...52 Transmission and Power Delivery...53 Permits, Licenses and Approvals...53 Operating Statistics...54 Annual Operating Results...55 Certain Financial Statements Relating to the Magnolia Power Project...55 PROJECT A PARTICIPANTS...57 DEVELOPMENTS IN THE CALIFORNIA ENERGY MARKETS...58 Background; California Electric Market Deregulation...58 State Legislation...58 Impact of Developments on the Project A Participants...61 OTHER FACTORS AFFECTING THE ELECTRIC UTILITY INDUSTRY...61 Federal Energy Legislation...61 ISO FERC Filings...62 American Recovery and Reinvestment Act of Other Factors...63 CONSTITUTIONAL CHANGES IN CALIFORNIA...64 LITIGATION...65 FEDERAL AND STATE INCOME TAXES...65 RATINGS...66 UNDERWRITING...67 FINANCIAL ADVISOR...67 CERTAIN LEGAL MATTERS...67 VERIFICATION OF MATHEMATICAL COMPUTATIONS...67 AVAILABLE INFORMATION...68 Page ii

7 TABLE OF CONTENTS (continued) APPENDIX A PROJECT A PARTICIPANTS WITH THE LARGEST GENERATION ENTITLEMENT SHARES AND GENERATION COST SHARES...A-1 APPENDIX B SUMMARIES OF CERTAIN DOCUMENTS...B-1 APPENDIX C ESTIMATED DEBT SERVICE REQUIREMENTS FOR THE BONDS...C-1 APPENDIX D PROPOSED FORM OF CO-BOND COUNSEL OPINION...D-1 Page iii

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9 Official Statement relating to $258,070,000 Southern California Public Power Authority (a public entity organized under the laws of the State of California) $146,535,000 Magnolia Power Project A, Refunding Revenue Bonds, $111,535,000 Magnolia Power Project A, Refunding Revenue Bonds, INTRODUCTION Purpose This Official Statement (which includes the cover page, the table of contents and the appendices attached hereto) is furnished by the Southern California Public Power Authority (the Authority ), a joint powers agency and a public entity organized under the laws of the State of California, to provide information concerning the Magnolia Power Project described herein and the $146,535,000 aggregate principal amount of Magnolia Power Project A, Refunding Revenue Bonds, (the Bonds ) and $111,535,000 Magnolia Power Project A, Refunding Revenue Bonds, (the Bonds and, together with the Bonds, the 2009 Bonds ) to be issued by the Authority. It is a condition to the sale and delivery of the 2009 Bonds, that both Series of 2009 Bonds (i.e., the Bonds and Bonds) be sold and delivered on the same day. Terms capitalized but not defined herein have the meanings set forth in the respective agreements described herein. The 2009 Bonds are being issued (i) to refund all of the outstanding Magnolia Power Project A, Refunding Revenue Bonds, (the 2007 Bonds ), (ii) to fund a debt service reserve account for each Series of the 2009 Bonds, (iii) to make a payment to the counterparties under related interest rate swaps identified to the 2007 Bonds to induce substantial modifications thereof and (iv) to pay the costs of issuance relating to the 2009 Bonds. See The Authority s Refunding Plan. Authority for Issuance The 2009 Bonds are being issued pursuant to the provisions relating to the joint exercise of powers found in Chapter 5 of Division 7 of Title 1 of the Government Code of California, as amended from time to time (the Act ), and the Authority s Indenture of Trust, dated as of March 1, 2003 (the Original Indenture of Trust ), from the Authority to U.S. Bank National Association, as trustee (the Trustee ), as supplemented by the First Supplemental Indenture of Trust, dated as of March 1, 2003, from the Authority to the Trustee (the First Supplemental Indenture of Trust ), as supplemented and amended by the Second Supplemental Indenture of Trust, dated as of June 1, 2006, from the Authority to the Trustee (the Second Supplemental Indenture of Trust ), as supplemented by the Third Supplemental Indenture of Trust, dated as of June 1, 2007, from the Authority to the Trustee (the Third Supplemental Indenture of Trust ), as supplemented and amended by the Fourth Supplemental Indenture of Trust, dated as of April 1, 2008, from the Authority to the Trustee (the Fourth Supplemental Indenture of Trust ), as supplemented and amended by the Fifth Supplemental Indenture of Trust, dated as of April 1, 2009, between the Authority and the Trustee (the Fifth Supplemental Indenture of Trust ), as supplemented and amended by the Sixth Supplemental Indenture of Trust, dated as of April 1, 2009, between the Authority and the Trustee (the Sixth Supplemental Indenture of Trust ), and as supplemented and amended by the Seventh Supplemental Indenture of Trust, dated as of April 1, 2009, between the Authority and the Trustee (the Seventh Supplemental Indenture of Trust ). Such Original Indenture of Trust, First Supplemental Indenture of Trust, Second Supplemental Indenture of Trust, Third

10 Supplemental Indenture of Trust, Fourth Supplemental Indenture of Trust, Fifth Supplemental Indenture of Trust, Sixth Supplemental Indenture of Trust and Seventh Supplemental Indenture of Trust are herein collectively referred to as the Indenture of Trust. Outstanding Bonds Upon the issuance of the 2009 Bonds and the redemption of the 2007 Bonds, there will be outstanding $85,410,000 of the Authority s Magnolia Power Project A, Revenue Bonds, (the 2003 Bonds ) and $31,535,000 of the Authority s Magnolia Power Project A, Revenue Bonds, (the 2006 Bonds ). The Authority has reserved the right to issue additional parity bonds under the Indenture of Trust on the terms and conditions and for the purposes stated in the Indenture of Trust. The 2003 Bonds, the 2006 Bonds, the 2009 Bonds and any other bonds hereafter issued pursuant to the Act and the Indenture of Trust on parity with the 2003 Bonds, the 2006 Bonds, and the 2009 Bonds are herein collectively referred to as the Bonds. Security and Sources of Payment for the 2009 Bonds The principal of and interest on the 2009 Bonds are payable solely from and secured solely by a pledge and assignment of Project A Revenues and certain other moneys described herein. Project A Revenues consist primarily of payments to be made to the Authority by the Project A Participants pursuant to the Project A Power Sales Agreements. The Project A Participants are the California cities of Anaheim, Burbank, Colton, Glendale and Pasadena. Such payments are to include the Project A Generation Cost Shares of the Magnolia Power Project and the Project A Indenture Cost Shares, as described herein. Each Project A Participant has agreed to make its share of such payments solely from its electric system revenues, and such payments constitute operating expenses of the Project A Participants. The payment obligations of the Project A Participants under the Project A Power Sales Agreements are not contingent upon the operation of the Magnolia Power Project or the performance or nonperformance by any party of any agreement for any cause whatsoever. The 2009 Bonds are not obligations of the State of California, any public agency thereof (other than the Authority), any member of the Authority or any Project A Participant and neither the faith and credit nor the taxing power of any of the foregoing (including the Authority) is pledged for the payment of the 2009 Bonds. The Authority has no taxing power. Interest Rate Swap Agreements In connection with the 2007 Bonds, the Authority entered into Interest Rate Swap Agreements (the Swap Agreements ) with Citibank, N.A. ( Citibank ) and with JPMorgan Chase Bank, N.A., as successor to Bear Stearns Financial Products Inc. ( JPMorgan ) (collectively, Citibank and JPMorgan are herein referred to as the Swap Providers ), whereby the Authority effectively fixed the interest rate on the 2007 Bonds. These Swap Agreements in the notional amount of $223,205,000 will be amended and transferred so that they will relate, upon the delivery of the 2009 Bonds, to the 2009 Bonds. As a result, all or most of the principal amount of each 2009 Bond will be hedged under the Swap Agreements. The obligation of the Authority to make regularly scheduled payments to the Swap Providers under the respective Swap Agreements is on parity with the Authority s obligation to make payments on the Bonds. There is no guarantee that the interest rate payable to the Authority pursuant to the Swap Agreements will match the variable interest rate on the 2009 Bonds at any time. In addition, under certain circumstances, the Swap Agreements may be terminated prior to the scheduled termination date and prior to the maturity date of the 2009 Bonds, and the Authority may be required to make a substantial termination payment to the Swap Providers. Pursuant to the Indenture of Trust and the Swap Agreements, any such termination payment owed by the Authority would be payable on a subordinate basis to the payment of the Bonds. In the event of early termination of any of the Swap Agreements, there can be no assurance that (i) the 2

11 Authority will receive any termination payment payable to the Authority by the respective Swap Provider, (ii) the Authority will have sufficient amounts available to pay any termination payment owed to the respective Swap Provider or (iii) the Authority will be able to obtain a replacement Swap Agreement with comparable terms. Each Swap Agreement constitutes a Parity Swap under the Indenture of Trust. The terms of the Swap Agreements or any termination thereof will not alter or affect any of the obligations of the Authority with respect to the payment of principal of or interest on the 2009 Bonds. The Swap Providers have no obligation to make any payments with respect to the principal of, the redemption price of, or interest on the 2009 Bonds. Neither the Owners of the 2009 Bonds, nor any person other than the Authority, shall have any rights under the Swap Agreements or against the Swap Providers in connection therewith. The Letters of Credit and the Reimbursement Agreements Payments of principal and redemption price of and interest on the Bonds will be initially supported by an irrevocable, direct-pay letter of credit (the Letter of Credit ) to be issued in favor of the Trustee for the benefit of the registered owners of the Bonds on the date of delivery thereof by KBC Bank N.V., acting through its New York Branch (the Bank ), upon which the Trustee is instructed to draw to pay the principal and redemption price of and interest on the Bonds. The Trustee may also draw funds under the Letter of Credit to pay the Purchase Price (as defined herein) of the Bonds tendered for payment and not remarketed. The Letter of Credit has a scheduled termination date of April 20, 2012, subject to earlier termination under conditions described herein, and may be extended or replaced by an alternate letter of credit or other credit support instrument at or prior to termination. The Bank is a Credit Provider for the Bonds under the Sixth Supplemental Indenture of Trust and the Letter of Credit constitutes a Credit Support Instrument pursuant to the Sixth Supplemental Indenture of Trust. The Authority and the Bank will enter into a Reimbursement Agreement, dated as of April 1, 2009 (the Reimbursement Agreement ), pursuant to which the Letter of Credit will be issued and the Authority will be obligated to reimburse the Bank for amounts drawn under the Letter of Credit subject to the terms and conditions therein. The Reimbursement Agreement constitutes a Credit Support Agreement under the Sixth Supplemental Indenture of Trust. See The Letters of Credit and Reimbursement Agreements The Letter of Credit and Reimbursement Agreement. Payments of principal and redemption price of and interest on the Bonds will be initially supported by an irrevocable, direct-pay letter of credit (the Letter of Credit and, together with the Letter of Credit, the Letters of Credit ) to be issued in favor of the Trustee for the benefit of the registered owners of the Bonds on the date of delivery thereof by Bank of America, N.A. (the Bank ), upon which the Trustee is instructed to draw to pay the principal and redemption price of and interest on the Bonds. The Trustee may also draw funds under the Letter of Credit to pay the Purchase Price of the Bonds tendered for payment and not remarketed. The Letter of Credit has a scheduled termination date of April 20, 2012, subject to earlier termination under conditions described herein, and may be extended or replaced by an alternate letter of credit or other credit support instrument at or prior to termination. The Bank is a Credit Provider for the Bonds under the Seventh Supplemental Indenture of Trust and the Letter of Credit constitutes a Credit Support Instrument pursuant to the Seventh Supplemental Indenture of Trust. The Authority and the Bank will enter into a Reimbursement Agreement, dated as of April 1, 2009 (the Reimbursement Agreement and, together with the Reimbursement Agreement, the Reimbursement Agreements ), pursuant to which the Letter of Credit will be issued and the Authority will be obligated to reimburse the Bank for amounts drawn under the Letter of Credit subject to the terms and conditions therein. The Reimbursement Agreement constitutes a Credit Support Agreement under the Seventh Supplemental of Trust. See The Letters of Credit and Reimbursement Agreements The Letter of Credit and Reimbursement Agreement. 3

12 Financing of the Project The Magnolia Power Project (the Project ) commenced commercial operation on September 22, The Project is owned by the Authority. The Project was constructed and acquired for the primary purpose of providing the participants in the Project with firm capacity and energy to help meet their power and energy requirements. A portion of the costs of construction and acquisition of the Project was funded from the proceeds of the 2003 Bonds and the 2006 Bonds. The 2007 Bonds were issued to refund a portion of the 2003 Bonds. The balance of the moneys necessary to acquire and construct the Project was provided primarily by proceeds of another series of bonds (which series constitutes a series of Project B Bonds ) issued by the Authority simultaneously with the issuance of the 2003 Bonds. Project B Bonds are outstanding in the principal amount of $13,430,000 and are payable exclusively from payments to be received from the City of Cerritos, California (the Project B Participant ). The Project B Participant is a member of the Authority. Project B Bonds are not secured by the Indenture of Trust, and the indenture of trust securing the Project B Bonds (the Project B Indenture of Trust ) does not secure the payment of the Bonds. A default under the Indenture of Trust shall constitute a default under only the Indenture of Trust and a default under the Project B Indenture of Trust shall constitute a default only under the Project B Indenture of Trust. The Authority and the Participants in the Magnolia Power Project The Authority, the membership of which is comprised of 11 California cities and one California irrigation district, was formed pursuant to the Act and the Joint Powers Agreement, dated as of November 1, 1980 (as amended, the Joint Powers Agreement ). See Southern California Public Power Authority. Five members of the Authority, namely the California cities of Anaheim, Burbank, Colton, Glendale and Pasadena (collectively, the Project A Participants ), have acquired entitlements to 95.8% of the capacity and energy of the Project. See Power Sales Agreements. For selected information concerning Project A Participants with generation entitlement shares of more than 10%, see Appendix A hereto. One other member of the Authority, the Project B Participant (and together with the Project A Participants, the Participants ), has acquired an entitlement to 4.2% of the capacity and energy of the Project. The six remaining members of the Authority (i.e., the California cities of Azusa, Banning, Riverside and Vernon, the Department of Water and Power of The City of Los Angeles (the Department ) and the Imperial Irrigation District) are not Participants in the Project and are not obligated to make any payments with respect to the Project. The Project B Participant established its electric utility by enacting an ordinance on February 13, The Project B Participant uses its entitlement to the Project to serve various retail customers within its jurisdictional boundaries. The load associated with these retail customers was approximately five MW as of the commercial operation date of the Project. The Project B Participant also plans to contract with additional retail customers located within the Project B Participant s boundaries to market its remaining entitlement in the Project. Any portion of the Project B Participant s entitlement to the Project that is not sold through its community aggregation program is being sold on the wholesale market. Description of the Project and Related Matters The Project. The Project commenced commercial operation on September 22, The Project consists of a combined cycle natural gas-fired generating plant, with a nominally rated net base capacity of 242 MW, and appurtenant facilities on a site in Burbank, California. The Project is capable of providing supplemental duct firing and steam injection, which increases the capacity of the generating plant to 310 MW of nominally rated net peaking capacity. However, the air permit for the Project limits the amount of annual emissions that the supplemental duct firing and steam injection may generate. For 4

13 additional information regarding the Project, including a description of its brief operating history, see Magnolia Power Project. Operation of the Project. The Project is being operated and maintained pursuant to the Construction Management and Operating Agreement, dated as of March 1, 2003, between the Authority and the City of Burbank ( Burbank ), a Project A Participant (the CM&O Agreement ). Under the CM&O Agreement, Burbank acted as the project manager (the Project Manager ) during the construction of the Project and is acting as the operating agent (the Operating Agent ) during the operation of the Project. Burbank is required to operate and maintain the Project in accordance with prudent utility practices. For a summary of the CM&O Agreement, see Summary of Certain Provisions of the Construction Management and Operating Agreement in Appendix B hereto. Management of the Project Pursuant to the Power Sales Agreements (as hereinafter defined), the Coordinating Committee was established to provide a liaison among the Authority and the Participants with respect to the Project, to oversee the activities of the Project Manager and the Operating Agent, to approve budgets and to make recommendations with respect to the Project. Except with respect to an arbitration proceeding under the CM&O Agreement, all actions taken by the Coordinating Committee require an affirmative vote of (i) no less than three Participants having Generation Entitlement Shares aggregating at least 65% or (ii) all or all but one of the Participants. However, the Power Sales Agreements provide that if a proposed action before the Coordinating Committee or the Authority s Board of Directors relates to a single type of bonds (e.g., the 2009 Bonds but not the Project B Bonds), and a Participant determines, in good faith, that such proposed action will not adversely affect, economically or otherwise, the Participant, the Participant shall not unreasonably withhold its affirmative vote with respect to such proposed action. All actions with respect to the Project taken by the Authority s Board of Directors require an affirmative vote of a majority of the Project Votes (as defined in the Authority s Joint Powers Agreement) cast thereon. Power Sales Agreements The Authority has sold entitlements to 100% of the capacity and energy of the Project pursuant to Power Sales Agreements (as hereinafter defined) with the six Participants. Pursuant to the Power Sales Agreements, each Participant is entitled to a percentage of the capacity and energy in the Project equal to the Participant s Generation Entitlement Share as defined in the Power Sales Agreements and is therefore obligated to make payments therefor in accordance with its Power Sales Agreement. Each Participant is a member of the Authority and is represented on the Authority s Board of Directors. For selected information concerning Project A Participants with Generation Entitlement Shares of more than 10%, see Appendix A hereto. The Participants are obligated to pay for such capacity and energy, including (in the case of the Project A Participants) amounts required to pay debt service on bonds issued to finance the Project, on a take-or-pay basis, that is, whether or not the Project is operating or is operable, or its output is suspended, interfered with, reduced or curtailed or terminated in whole or in part. In addition, such payments shall not be subject to any reductions and will not be conditioned upon the performance or non-performance by any party of any agreement. With respect to the Project A Participants, the payment obligations under the Power Sales Agreements, dated as of March 1, 2003, between the Authority and each of the Project A Participants (collectively, the Project A Power Sales Agreements ), constitute operating expenses of the respective Project A Participants, payable solely from their respective electric system revenues. See Security and Sources of Payment for the Bonds Project A Power Sales Agreements herein and Summary of Certain Provisions of the Project A Power Sales Agreements in Appendix B hereto. 5

14 Generation Entitlement Shares of the Participants. The following table sets forth the percentage entitlement (the Generation Entitlement Share ) of each of the Participants with respect to the output of the Project. Participants Generation Entitlement Shares (Magnolia Power Project) Project Base Capacity (MW) Project A Participants: City of Anaheim % 92 City of Burbank City of Colton City of Glendale City of Pasadena Project B Participant: City of Cerritos Total % 242 (1) (1) Nominally rated net peaking capacity of 310 MW. Operating and maintenance expenses of the Project are paid by the Participants in proportion to their respective Generation Entitlement Shares as set forth above. Only the Project A Participants pay amounts, pursuant to the Project A Power Sales Agreements, to be deposited into the funds or accounts established by the Indenture of Trust. Only the Project B Participant pays amounts, pursuant to the Project B Power Sales Agreement, dated as of March 1, 2003, between the Authority and the Project B Participant (the Project B Power Sales Agreement ), to be deposited into the funds or accounts established by the indenture of trust relating to the Project B Bonds. Notwithstanding the foregoing, if a Participant fails to pay its share of fuel, operation and maintenance costs under its Power Sales Agreement, then all of the non-defaulting Participants will be obligated to make step-up payments to the extent required by their respective Power Sales Agreements. See Security and Sources of Payment for the Bonds Project A Power Sales Agreements. The Project A Power Sales Agreements and the Project B Power Sales Agreement are referred to herein collectively as the Power Sales Agreements. Project B Power Sales Agreement. The Project B Participant has entered into the Project B Power Sales Agreement under which the payment obligations are payable solely from the Project B Participant s electric system revenues, which consist of moneys received from the sale of its Generation Entitlement Share of Project output in both retail and wholesale markets and any other revenues available to the Project B Participant s operation of its electric system. Debt Service Costs. Under the Project A Power Sales Agreements, the Project A Participants are solely responsible for the payment of debt service on the Bonds. The Project A Participants are not responsible for the payment of debt service on the Project B Bonds. The Project B Participant is solely responsible for the payment of debt service on the Project B Bonds and is not responsible for the payment of debt service on the Bonds. As a result, the only step-up obligation with respect to the payment of debt service on the Bonds occurs if one or more Project A Participants fail to make sufficient payments under their Project A Power Sales Agreements and as a result sufficient Project A Revenues do not exist to pay debt service on the Bonds. In such case, the non-defaulting Project A Participants will receive, by the fifth day of the month following a payment default, separate step-up invoices and will be required to make separate step-up payments (i.e., increased payments) with respect to debt service on the Bonds; provided, however, each non-defaulting Project A Participant s monthly step-up invoice and obligation to pay for unpaid debt service on the Bonds are limited to 35% of the debt service charge in such non- 6

15 defaulting Project A Participant s previous month s billing statement (which are separate from, and do not include any amounts with respect to, such step-up invoice). See Security and Sources of Payment for the Bonds Project A Power Sales Agreements Step-Up Invoices Prior to the Operating Reserve Depletion Date. The Project B Bonds are secured by lease rental payments to be made by the Project B Participant in connection with the lease of a parking facility owned by it to the Authority and the leaseback of such parking facility to the Project B Participant. The Project B Participant entered into the Project B Power Sales Agreement pursuant to which moneys received from (and only from) its electric utility operations, which consist of moneys received from the retail and wholesale sale of its entitlement share of Project output and any other revenues available to the Project B Participant s operation of its electric system, are used to pay its share of the fuel, operation and maintenance costs of the Project. The following table sets forth the share of the debt service and other Indenture of Trust costs payable by each of the Project A Participants. Project A Participants Project A Indenture Cost Shares City of Anaheim % City of Burbank City of Colton City of Glendale City of Pasadena Total % Fuel, Operation and Maintenance Costs. If one or more Participants fail to make sufficient monthly fuel, operation and maintenance cost payments under their Power Sales Agreements, all non-defaulting Participants will receive separate step-up invoices and will be required to make separate step-up payments with respect to fuel, operation and maintenance costs that remain unpaid. However, (i) each non-defaulting Participant s monthly step-up invoice and obligation to pay for unpaid operation and maintenance costs are limited to 35% of the fuel, operation and maintenance costs in such Participant s previous month s billing statement (which are separate from, and do not include any amounts with respect to, such step-up invoice) and (ii) step-up invoices for fuel, operation and maintenance costs will be issued by (a) the fifth day of the month following the date that is two months prior to the anticipated depletion of funds, if any, in the operating reserve account of the indenture of trust relating to the Project B Bonds or the Indenture of Trust, as the case may be (the Operating Reserve Depletion Date ) or (b) the fifth day of the month following the payment default date if the Operating Reserve Depletion Date has occurred already. See Security and Sources of Payment for the Bonds Project A Power Sales Agreements Step-Up Invoices Following the Operating Reserve Depletion Date. Termination of Rights in the Project. If a Participant fails to cure or fails to begin to cure a payment default within approximately three months from the date of its initial payment default, the Participant s rights in the Project (including its entitlements to capacity and energy) will be permanently and immediately terminated and the Authority will offer to assign, transfer and convey such Project rights and the associated obligations first to non-defaulting Participants and then to third parties; provided that such assignment, transfer and conveyance to third parties will not adversely affect the federal tax exemption relating to the Bonds or exceed the remaining portion of private business use or private payments relating to such defaulting Participant s rights in the Project. If all such Project rights and obligations are not so assigned, transferred and conveyed, the Authority will use its best efforts to sell the related Project capacity and/or energy, for long-term or short-term sales, on the best terms readily 7

16 available pursuant to terms and conditions established by the Authority. See Security and Sources of Payment for the Bonds Project A Power Sales Agreements Termination and Disposal of Project Rights. Project Site Lease and Services Agreement The Project was constructed on land owned by Burbank and located within its boundaries. Pursuant to the Magnolia Power Project Site Lease and Services Agreement, dated April 23, 2002, between the Authority and Burbank (as amended, the Project Site Lease Agreement ), Burbank has leased the Project site to the Authority and provides certain services, including electric and water services, in connection with the construction, operation and maintenance of the Project. Burbank also has leased to the Authority a portion of an existing Burbank structure which the Authority has renovated for Project purposes. The Authority has an option to expand the Project site to include certain adjacent property that may be used for water treatment or other Project-related purposes. The Authority makes monthly rental payments to Burbank pursuant to the Project Site Lease Agreement. The initial term of the Project Site Lease Agreement expires on December 31, The Authority has the option to renew or extend the term of the Project Site Lease Agreement for an additional period of time, as determined by the Coordinating Committee, but not beyond April 23, No Continuing Disclosure The 2009 Bonds are initially exempt from the rules of the Securities and Exchange Commission relating to continuing disclosure of annual financial information and certain material events. Remarketing Agent Citigroup Global Markets Inc. has been appointed to serve as Remarketing Agent for the 2009 Bonds. The Remarketing Agent will carry out its duties and obligations in accordance with the Indenture of Trust and the Remarketing Agreement executed in connection with the 2009 Bonds. Certain Relationships Citigroup Global Markets Inc., the Remarketing Agent and underwriter for the 2009 Bonds, and Citibank, N.A., a Swap Provider, are each indirect wholly-owned subsidiaries of Citigroup Inc., a financial holding company. Certain Information; Summaries and References to Documents In preparing this Official Statement, the Authority has relied upon information relating to certain of the Project A Participants provided to the Authority by such Project A Participants. This Official Statement also includes summaries of the terms of the 2009 Bonds, the Indenture of Trust, the Power Sales Agreements, the Letters of Credit, the Reimbursement Agreements, and certain documents, agreements and arrangements relating to the Project. The summaries of and references to all documents, agreements, statutes, reports and other instruments referred to herein do not purport to be complete, comprehensive or definitive, and each such summary and reference is qualified in its entirety by reference to each such document, agreement, statute, report or instrument. Capitalized terms not defined herein shall have the meanings as set forth in the respective documents. 8

17 THE AUTHORITY S REFUNDING PLAN The proceeds of the 2009 Bonds, together with certain other available moneys, will provide funds to refund the outstanding 2007 Bonds (the Refunded Bonds ). The Refunded Bonds are expected to be redeemed on April 23, 2009 (the 2009 Redemption Date ) in the principal amount of $223,205,000. Pursuant to the terms of the Sixth Supplemental Indenture of Trust and the Seventh Supplemental Indenture of Trust, as applicable, the Authority will transfer a portion of the proceeds of the 2009 Bonds, together with moneys in the debt service account and the debt service reserve account relating to the 2007 Bonds, to the 2007 Bonds Escrow Fund (the Escrow Fund ) created and established pursuant to the Sixth Supplemental Indenture of Trust. The moneys in the Escrow Fund will be applied to pay the redemption price of (i.e., 100% of the principal amount thereof) and accrued interest on the Refunded Bonds on the 2009 Redemption Date. The Escrow Fund shall be held by the Trustee, as escrow agent, in irrevocable trust and used solely for the payment of the accrued interest on and redemption price of the Refunded Bonds, subject only to the payment to the Authority in accordance with the Indenture of Trust of any cash not required for such purpose. On the date of delivery of the 2009 Bonds, the Authority will receive a report from The Arbitrage Group Inc., an independent verification agent, verifying the adequacy of the cash on deposit in the Escrow Fund, together with certain other available amounts, if any, to pay the redemption price of and accrued interest on the Refunded Bonds on the 2009 Redemption Date. Upon the payment to the owners of the Refunded Bonds of the redemption price of and interest on the Refunded Bonds, the owners of the Refunded Bonds shall cease to be entitled to any lien, benefit or security under the Indenture of Trust, and all covenants, agreements and other obligations of the Authority to the owners of the Refunded Bonds shall thereupon cease, terminate and become void and be discharged and satisfied. ESTIMATED SOURCES AND USES OF FUNDS The estimated sources and uses of funds relating to the 2009 Bonds are shown below: Sources: Principal amount of 2009 Bonds $258,070,000 Transfer from 2007 Debt Service Account 1,120,363 Transfer from 2007 Debt Service Reserve Account 16,871,109 Total Sources $276,061,472 Uses: Deposit to Escrow Fund $223,954,123 Deposit to Debt Service Reserve Account 9,647,297 Deposit to Debt Service Reserve Account 7,347,946 Payments to Swap Providers 33,679,000 Costs of Issuance (1) 1,433,106 Total Uses $276,061,472 (1) Includes, among other things, underwriter s discount, upfront Bank fees, Trustee s fees, Co-Bond Counsel fees, underwriter s counsel fees, rating agencies fees, Financial Advisor fees, verification agent fees and other costs relating to the 2009 Bonds. 9