LOS ANGELES -- The executive board of the Washington Public Power Supply System plans to meet Thursday for the final review of a preliminary official statement for an advance refunding issue of as much as $450 million in mid-September.

The proposed refinancing involves WPPSS nuclear power projects 1,2, and 3 bonds. WPPSS officials expect to size the deal from $400 million to $450 million, depending "on what interest rates do" in the coming weeks, noted James D. Perko, the supply system's chief financial officer.

WPPSS has not been in the market since last October, when it completed the last major leg of a massive $3.9 billion refinancing plan for units 1, 2, and 3 bonds with high tax-exempt interest rates.

The supply system for many years had been unable to refinance the bonds, in large part because of legal uncertainty stemming from its default on $2.25 billion of bonds for units 4 and 5. The Washington State Supreme Court held in June 1983 that participants in units 4 and 5 lacked the authority to make payments securing the bonds for the canceled plants.

But units 1, 2, and 3 bonds never went into default because they have been secured by net-billing agreements that obligate Bonneville to provide funds to pay all costs associated with the projects. Unit 2 is the only one of the five WPPSS nuclear power plants that is operating. Units 1 and 3 are in an extended construction delay.

WPPSS kicked off the refunding program for net-billed bonds two years ago and initially targeted debt with interest rates of 9% or higher.

Now that those higher-rate bonds are refinanced, however, the supply system's refundings are market driven and "more typical" of the targeted savings levels for such deals, Mr. Perko said. WPPSS is shooting for savings of at least 5% -- on

net present value basis -- to justify its refinancings, he added.

The proposed refunding is expected to target bonds with rates ranging from 7.4% to 8%, Mr. Perko said.

Pricing is planned during the week of Sept. 16, with the closing expected on Oct. 2.

Donald W. Mazur, managing director of WPPSS, told the system's executive board last Friday that present value savings of about $20 million are expected from the proposed refunding.

In his newsletter, "Keeping Current...," Mr. Mazur also noted that Bonneville reported net revenues of $490.1 million through June 30.

Of that total, Mr. Mazur said that $255.5 million stemmed from debt-service savings tied to the refinancing of supply system bonds. The balance of net revenues was due primarily to power sales to direct-service customers, such as aluminum plants, and sales to non-generating public utilities.

Bonneville's operating revenues for the same period were $1.8 billion.

Mr. Perko noted that Bonneville has had a good year for rainfall, a development which benefits hydroelectric generation in the Pacific Northwest. Bonneville also is in "a very, very good financial situation," Mr. Perko added.

The net-billed bonds outstanding are rated double-A.

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