Chugach Acquisition of ML&P Anchorage Assembly January 19, 2018

Similar documents
Chugach-ML&P Consolidation Enterprise and Utility Oversight Committee Meeting December 21, 2017

Proposed Sale by the Municipality of Anchorage of Municipal Light & Power to Chugach Electric Association Executive Summary

ANCHORAGE, ALASKA AO No (S)

ANCHORAGE, ALASKA AO No

MUNICIPAL LIGHT & POWER

Municipal Light & Power Corporate Headquarters Anchorage, AK

Municipal Light & Power

MUNICIPALITY OF ANCHORAGE, ALASKA ELECTRIC UTILITY FUND. Financial Statements, Required Supplementary Information and Other Information

MUNICIPAL LIGHT AND POWER

CHUGACH ELECTRIC ASSOCIATION, INC. ANCHORAGE, ALASKA AUDIT AND FINANCE COMMITTEE MEETING AGENDA

Public Finance & Investments Division Finance Department Anchorage: Performance. Value. Results.

Municipal Light & Power Analysis. Municipality of Anchorage / Municipal Light & Power

ELECTRONICALLY FILED WITH RCA

Financial Planning and Budget Analyst. Position Number Community Division/Region Yellowknife Corporate Services/HQ

Mark Spafford, General Manager Department of Solid Waste Services #DoSomething. October 18 and 19, 2018

Background. A copy of the Amendment is attached for the Commission s information.

Municipal Budget Process

MUNICIPAL LIGHT AND POWER

Audited Financial Statements and Other Financial Information BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS

CHUGACH ELECTRIC ASSOCIATION 1 STATEMENT OF OPERATIONS. Allowance for Funds Used During Construction. Total Cost of Electric Service (MTD Actual)

Municipal Light & Power

Appendix T. Financial Policies

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 10-Q

Public Finance & Investments Division Finance Department Anchorage: Performance. Value. Results.

Utility/Enterprise Budget Process and Procedures

CHUGACH ELECTRIC ASSOCIATION, INC. ANCHORAGE, ALASKA AUDIT AND FINANCE COMMITTEE MEETING AGENDA

CHUGACH ELECTRIC ASSOCIATION, INC. ANCHORAGE, ALASKA AUDIT AND FINANCE COMMITTEE MEETING AGENDA

Statements of Net Position - Business - Type Activities South Carolina Public Service Authority As of March 31, 2018 and December 31, 2017

Statements of Net Position - Business - Type Activities South Carolina Public Service Authority As of September 30, 2018 and December 31, 2017

Merger Plus. Robert S. Shapard Executive Vice President & CFO UBS Natural Gas & Electric Utilities Conference New York City February 17, 2005

INVESTOR PRESENTATION MARCH 2018

Municipality of Anchorage

AEA has entered into several agreements to provide for the operation and maintenance of the Project:

SECOND AMENDED AND RESTATED ALASKA INTERTIE AGREEMENT. Among

All amounts in Canadian dollars unless otherwise stated.

STATE OF ALASKA BEFORE THE REGULATORY COMMISSION OF ALASKA. Paul F. Lisankie T.W. Patch Norman Rokeberg Janis W. Wilson

Calleguas Municipal Water District Procurement Policy

Criteria for Eligibility

Global Presence / Local Knowledge First Quarter Earnings Call & Update

Building Generation The United Illuminating Company Perspective

Investor Update Conference Call January 16, 2013

COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF ENVIRONMENTAL PROTECTION : : : : COMMENTS OF RETAIL ENERGY SUPPLY ASSOCIATION

Creating a Leading National Water Utility

MINISTRY OF THE ATTORNEY GENERAL

STATE OF ALASKA BEFORE THE REGULATORY COMMISSION OF ALASKA ) ) ) ) ) PREFILED DIRECT TESTIMONY OF DANIEL M. DIECKGRAEFF

ORDER NO * * * * * * * * This matter comes before the Public Service Commission of Maryland

Homer Electric Association, Inc. and Subsidiary (Alaska 5 and Alaska 33 Kenai)

MEMORANDUM OF UNDERSTANDING REGARDING JOINT DEVELOPMENT OF SOUTH ANCHORAGE POWER PROJECT. -(t

ANCHORAGE WATER AND WASTEWATER UTILITY

AGA Financial Forum May 21-23, 2017

Ballot Proposal for Retail Sales Tax on Alcohol within the Municipality of Anchorage AO No

In short, the 2019 Proposed Budget addresses our current responsibilities and paves the way to a strong, sustainable fiscal future for the MOA.

Homer Electric Association, Inc. and Subsidiary (Alaska 5 and Alaska 33 Kenai)

3Q 2018 Earnings Conference Call. October 24, 2018

Council Action: Certification of Funds: Creates: A negative fiscal impact in the amount of: $ 314, A positive fiscal impact in the amount of: $

FIRST QUARTER 2018 BUSINESS AND FINANCIAL UPDATE

General management: update

February 18, Internal Audit Report Special Assessments Anchorage Water and Wastewater Utility

BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE OPERATING AND REVENUE FUNDS

The MOA will continue its discussion with the Anchorage School District to develop a shared services program.

Defence DatA. European Defence Agency Building Capabilities for a Secure Europe

Municipality of Anchorage. Proposed 2011 Municipal Utility Enterprise Activity Operating and Capital Budgets

EKLUTNA POWER PURCHASE AGREEMENT BETWEEN CHUGACH ELECTRIC ASSOCIATION, INC. ( PURCHASER ) AND MUNICIPALITY OF ANCHORAGE ( SELLER )

Center Coast MLP Focus Fund Class A Shares (CCCAX) Class C Shares (CCCCX) Institutional Class Shares (CCCNX)

WESTAR ENERGY AND GREAT PLAINS ENERGY ANNOUNCE MERGER OF EQUALS TO FORM LEADING MIDWEST ENERGY COMPANY. July 10, 2017

5::BASE CASE FINANCIAL MODEL

RULES AND REGULATIONS INDEX. Sale for Resale Community Solar Service Economy Energy Transactions Regulatory Cost Charge...

Management s Discussion and Analysis of Financial Performance for the Quarter Ended December 31, 2017

RIVERSIDE TRANSIT AGENCY 1825 Third Street Riverside, CA April 23, 2009

Agenda - Alternate Service Delivery Committee - May 17, 2005 REPORTS

FRC Consultation on the UK Corporate Governance Code.

Susitna Watana Cost of Power Analysis

VF Reports Third Quarter Fiscal 2019 Results; Raises Full Year Fiscal 2019 Outlook

Management s Discussion and Analysis of Financial Performance for the Quarter Ended December 31, 2018

DEPARTMENTAL QUARTERLY FINANCIAL REPORT Q1/

Update. Third Quarter Kevin Marsh, CEO Jimmy Addison, CFO

Investor Presentation. August 2014

Center Coast MLP Focus Fund

Homer Electric Association, Inc. and Subsidiary (Alaska 5 and Alaska 33 Kenai)

CHUGACH ELECTRIC ASSOCIATION, INC. ANCHORAGE, ALASKA. April 29, Sherri McKay-Highers, Manager, Budget and Financial Reporting

P3 Fundamentals and Best Practices in Resource and Project Management

Panama Canal Authority

Supplementary Estimates

Panama Canal Authority

Creating a Leading National Water Utility:

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C FORM 8-K

Wells Fargo Securities 11 th Annual Pipeline, MLP & Energy Symposium. New York December 5, 2012

Reset of Westlake Chemical Partners LP IDR Tiers Effective July 27, 2018

GOVERNMENT OF YUKON. Financial Statement Discussion and Analysis for the year ended March 31, 2013

SOCALGAS REBUTTAL TESTIMONY OF JILL TRACY (ENVIRONMENTAL SERVICES) June 2015

Community Choice Aggregation Summary Excerpted From: Draft Base Case Feasibility Evaluation Prepared by Navigant Consulting

ANCHORAGE, ALASKA AO No

FOURTH QUARTER 2015 FINANCIAL RESULTS. Element Financial Corporation Q Earnings Call

Financing of administrative and management costs

Net income per share: Diluted. yen -

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C V.F. Corporation (Exact Name of Registrant as Specified in Charter)

BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION

DEUTSCHE 2017 CLEAN TECH, UTILITIES & POWER CONFERENCE

CMS ENERGY CORPORATION Earnings Per Share By Year GAAP Reconciliation (Unaudited)

Arrangements for the revision of the terms of reference for the Peacebuilding Fund

Transcription:

Chugach Acquisition of ML&P Anchorage Assembly January 19, 2018

Key Considerations Structured to provide benefit to the MOA, Chugach and ML&P ratepayers Opportunity to provide benefits to MEA, consistent with January 9, 2018 Anchorage Assembly Resolution Substantial benefits realized over the long term Cost reductions realized through time Responsive to industry changes Primary areas of savings O&M efficiencies Cost of capital 2

Agenda Key Items Jobs No employees to be laid off as a result of the transaction Purchase Details Over $1 billion deal; a fair price Savings Chugach Financial Strength Operational and financing savings to result in lower electric rates Despite debt financing, the larger scale and amortization of new debt will result in a stronger utility through time 3

Jobs No employees will be laid off as a result of the acquisition Savings will be through attrition (voluntary exits and retirements) Applies to represented and non represented employees of both Chugach and ML&P Natural attrition is 4 to 5 percent annually; some positions will be refilled Provides consolidation of electric utility expertise 4

Timeline Expected Schedule January 23 rd, 2018 April 3 rd, 2018 April December 2018 June 2018 January 2019 November 2018 July 2019 March September 2019 Assembly votes to approve ballot language Municipal election Finalize term sheet between Chugach and MOA File request for approval with the RCA Commission approval (six months following RCA filing) Transaction closing 5

Chugach Offer Acquisition ML&P Debt $524,000,000 Defeasance $18,000,000 ML&P Equity $170,000,000 Subtotal $712,000,000 Annual Acquisition Payments (NPV) 1 $170,300,000 Chugach Cost of Acquisition $882,300,000 Payments in Lieu of Taxes (NPV) 1 $142,000,000 Total MOA Receipts $1,024,300,000 1 Net present value based on 5% discount rate, 30 years. 6

30 Year Payments to MOA Payment at Closing (2019) $ Millions $30 $25 $20 $15 Equity $170,000,000 Debt, including cost of defeasance $542,000,000 Total Amount Due at Closing $712,000,000 Annual Payments Total NPV $312.3 million Annual Payments in Lieu of Taxes $10 $5 Annual Acquisition Payments $0 7

Timing of Annual Savings and Payments 30m 25m BRU Property Tax Annual Savings 20m 15m 12m 13m 15m 16m Non Fuel Generation O&M Savings 11m 10m 9m 8m Operational Savings 5m 0m 2020 2025 2030 2035 2040 2045 2050 2055 Year 8

Chugach Equity Ratio 35% 30% Equity $187m 29% 25% Equity $256m 23% Equity Raito 20% 15% Equity $202m 14% 16% 16% 17% 18% 18% 19% 20% 21% 10% 5% 0% Current Acquisition Year Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Year 1 Current reflects actual Chugach equity ratio on November 30, 2017. 2 Assumes capital retirement rate of 50% of prior year margins. 3 Achieved equity ratios will depend on the timing of the transaction and performance of the combined utility. 9

Combined Balance Sheet Strength Although the combined entity will experience an immediate reduction in equity ratio, the increased scale and larger balance sheet will position the utility to weather future challenges Over time, the overall position of the combined entity will improve: (1) Competitive Position: Savings achieved through synergy will make the combined entity more competitive (2) Diversification: The combination of the two territories will widen the customer base and expose the combined utility to less volatility (3) Fuel Sources: The combined entity will be better positioned to integrate renewables and negotiate favorable terms with gas suppliers 10

Lower Cost of Capital for Customers Year 1 Cost of Capital Company Capital Component Capital Structure Cost Weighted Average Cost of Capital Debt 64.6% 3.93% 2.54% ML&P Equity 35.4% 13.00% 4.61% Weighted Average Cost of Capital 7.15% Chugach (on acquisition purchase price) Debt 100% 5.00% 5.00% Equity 0.35 TIER 1.75% Weighted Average Cost of Capital 6.75% 40 basis point advantage on cost of capital in Year 1 In addition, Chugach returns capital credits to its members 11

Key Benefits of Acquisition Electric cooperative business structure Retain local control through member elected board Lower overall cost of capital Capital credit retirements Eliminate duplication Combine functions on company wide basis Single headquarters building / complex Generation reserves Oversight of Bradley Lake, Eklutna and the Southcentral Power Project Resource management and efficiency Operations and maintenance activities Generation engineering and project management Legal, regulatory, environmental and insurance 12

Summary Unique opportunity to combine two utilities that have adjacent service territories and natural synergies Permanent cost savings will be realized through time and reflected in electric rates No job layoffs as a result of the transaction No rate increases as a result of the transaction Transaction structured to provide substantial benefit within the Anchorage community 13