SEATTLE -- Voters in Eugene, Ore., on Tuesday approved $150 million of revenue bonds that will allow the Eugene Water & Electric Board to finance numerous small energy projects.
The electric board has about $50 million of direct obligations outstanding, which is "relatively low for a utility of our size," said James Origliosso, treasurer of the Eugene utility.
Local officials devised the new financing plan as part of a long-term strategy aimed at giving the utility more control over its energy resources.
The Eugene utility depends on the Bonneville Power Administration for about 70% of its power purchases, and the percentage would grow to about 92% by the year 2010 "if we do nothing," Origliosso said.
By implementing the new resource plan, the Eugene board anticipates that its reliance on Bonneville for power purchases will decline to about 45% over the next decade, Origliosso said.
"In Eugene, we feel that we're taking control of our energy future," Origliosso told municipal analysts Tuesday at a panel that explored Pacific Northwest power issues. The panel was part of a pre-conference session that informally kicked off the National Federation of Municipal Analysts meeting this week.
In a separate interview, Origliosso noted the utility generally sells its bonds on a competitive basis.
Capitalizing on this week's election, the utility could be in the market by next month with a $30 million competitive offering to finance hydroelectric project upgrades, he said.
The $150 million authorization will finance "a lot of [decentralized] projects, and they're small," which meshes with the utility's diversification strategy, Origliosso said.
Besides hydroelectric projects, future bond sales could fund one or more natural gas-fired cogeneration plants and a potential share in a wind-power facility.
Origliosso told analysts on Tuesday before the bond election results were tallied that "we're looking for a landslide" because community involvement played an important role in honing the utility's energy strategy.
The treasurer's prediction was borne out: Voters approved the bonds by about a three-to-one margin, Origliosso said on Tuesday night after initial results were reported.
He said the utility might sell from $75 million to $100 million of bonds this year. Up to $25 million of issuance could involve conservation programs; Bonneville would give the utility money to pay debt service on the conservation bonds because of a partnership arrangement.
Origliosso said the Eugene utility also is studying refinancing $100 million of bonds it has outstanding in exchange for a 30% share in the Trojan Nuclear Project. Those bonds typically are not considered the utility's obligation because Bonneville secures the debt through net-billing arrangements.
The Trojan project was taken out of service last January after its owners concluded they could obtain more cost-effective and reliable resources. The Oregon plant has also been the target of numerous unsuccessful ballot measures seeking to shut it down.
Origliosso said "we're not worried" about the bonds for the discontinued project because Bonneville's security arrangement remains in effect regardless of whether the plant operates.
But given the complexity of a refinancing plan for the bonds, he said the utility will probably sell the issue on a negotiated basis. A request for qualifications could go out to selected underwriters in about 30 days, he said.
Origliosso said that bond lawyers are exploring whether the utility might need a private letter ruling from the Internal Revenue Service because of certain questions tied to Bonneville's guarantee on the tax-exempt debt. If a ruling is need, the refunding could be delayed, he said.
The utility would like "to be out there this year [with the refunding], particularly if the interest rate environment remains favorable," he said.
