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Presentation: prepayment financing can lower Community Power energy costs, advisor tells board
Summary
EFM Financial Advisors explained how prepayment financing lets San Diego Community Power use tax‑exempt bond proceeds to prepay long‑term power contracts, producing multi‑million dollar projected savings; the board received the file and asked no public questions.
San Diego Community Power staff and a municipal advisor presented a primer on clean energy prepayment financing at the board’s Feb. 27 meeting, describing how tax‑exempt bond proceeds issued by a conduit issuer can prepay portions of existing power purchase agreements to reduce ongoing PPA costs.
Chief Financial Officer Eric Washington introduced Mike Berwanger of EFM Financial Advisors, who described the mechanism and early results from the agency’s first transaction. Berwanger said the CCA community has completed several prepaid transactions since 2021 and that Community Power executed its first transaction in November, assigning 4 million megawatt‑hours into a 30‑year structure that produced projected cash‑flow savings of more than $50 million and an approximate annual reduction of $6.8 million on the assigned contracts.
Berwanger explained the structure: Community Power retains the physical rights and responsibilities for the energy under its PPAs while the bank and conduit issuer (CCCFA) facilitate issuance of nonrecourse tax‑exempt bonds; proceeds are used to prepay counterparties, producing a lower effective price for the agency. He emphasized the nonrecourse nature of the bonds — they are not the agency’s debt — and that termination of a transaction would generally return the agency to prior contract economics rather than create new obligations for the agency.
Board members had no public comment and offered thanks for the briefing. The board treated the presentation as a receiving file.
