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LCRA board adopts FY2026 business and capital plans, authorizes up to $550 million in debt
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Summary
The Lower Colorado River Authority board approved the FY2026 business and capital plans, heard an update on the Timmerman power plant energizing and large multi-year investment forecasts, and authorized the issuance of up to $550 million in refunding revenue bonds.
The board of directors of the Lower Colorado River Authority approved the authority's fiscal year 2026 business and capital plans and authorized up to $550 million in refunding revenue bonds at its May 21 meeting.
The action also followed a briefing by Phil Wilson, who described summer preparations across LCRA’s power, transmission and water operations and announced that the Timmerman (Timmerman) power plant in Caldwell County had been energized for initial system testing. “Energizing the plant is very important and exciting,” Phil Wilson said during his remarks. He said the next steps are engine startups and then commercial operation once the Electric Reliability Council of Texas accepts the plant into market participation.
The nut graf: The board vote implements the authority’s business strategy for the coming year and authorizes borrowing and refinancing to support that plan. Board members were asked to approve both the near-term financing and the broader capital program that funds generation, transmission, water projects and telecommunications work described in the FY2026 plan.
Board finance staff told directors that LCRA expects consolidated net margins to finish the year ahead of budget and that finance projections show debt service coverage improving relative to the budgeted target. Jim Travis presented the financial report, saying consolidated net margin through April exceeded budget by about $54 million and that the forecasted debt service coverage was roughly 1.53 times versus a budgeted 1.44 times.
Wilson and staff outlined multi-year capital forecasts included in the business plan: an increase in transmission investment, a telecommunications capital program and water-supply project spending to support the Lower Colorado Basin. The board packet and Wilson’s remarks listed the transmission investment plan at about $5.9 billion over five years and cited $168 million for telecommunications capital. Board materials and Wilson’s presentation also referenced planned water-supply projects and the Arbuckle Reservoir, which he said is expected to be in service this summer and could add as much as 90,000 acre-feet per year to regional supply.
On the motion to authorize issuance of up to $550 million of LCRA debt — described by staff as including long-term funding for the Timmerman plant and the refinancing of callable 2015 debt (part of which was originally issued to fund the Arbuckle Reservoir) — the board voted in favor by voice. The staff presentation said the exact timing and savings from the refunding will depend on market conditions and that the authority plans to go to market when conditions are favorable.
Directors discussed that the authority’s practice is to issue short-term debt for ongoing capital expenditures and convert portions to long-term debt when market conditions support refinancing. The board vote followed earlier committee briefings and a finance-committee discussion.
Ending: The board adopted the FY2026 business and capital plans and approved the debt authorization; staff said they will return with timing and pricing details when they pursue the refunding in the market.
