bonneville power administration bpa debt restructuring presentation to the energy northwest board...

Bonneville Power Administration

BPA Debt Restructuring Presentation

to the

Energy Northwest Board

Audit, Legal, and Finance Committee

March 28, 2002

2


Refresher on Debt Restructuring

• Debt Restructuring Program resulted from the examination of Federal and non-Federal debt as single portfolio to be optimized in terms of cost and access to capital.

• The heart of the program is to:1. Extend the tax-exempt Energy Northwest (ENW) debt to the 2013-2018

period.2. Use the cash savings from the lower ENW amortization to advance

amortize Treasury bonds.3. Issue short maturity Treasury bonds for new capital to allow advance

amortization and avoid costly call premiums.

• The results of the program, if carried out to the maximum potential, will be to:1. Replenish Treasury borrowing authority by up to $3.3 billion between

2001-2012.2. Reduce BPA’s total interest expense by an average of over $20 million per

year through 2018, a net present value savings of over $240 million (using a 6.5% discount rate).

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Program Objectivesas of June, 2000

BPA is proposing to undertake a program of prudent debt management that:

1. Reduces total debt service costs of BPA and lowers rates to ratepayers,

2. Sustains delivery capability of capital programs, and

3. Allows more variable rate debt as recommended by Energy Northwest.

4


Potential Program Magnitudeas of June 2001

• Maximum size of program is $1-2 billion, if Federal amortization opportunities are limited to Power.

• If Debt Optimization proceeds can be applied to Transmission amortization, the program could expand to $2-3 billion.

• Given uncertainties about other sources of funding, BPA would like to preserve all cash flow opportunities in the near-term.

5


Results Update

• Four bond sales have been completed to date.

• Approximately $950 million of cash flow from the Energy Northwest debt extensions to date will be used to amortize additional Federal debt.

• $183 million of additional Federal amortization has been made (FY 2000/01) to alleviate the pressure on borrowing authority.

• A public process on inter-business line transactions (“interfunctional loan”) is planned to test the use of debt extension proceeds for transmission investments, which would allow the potential of the program to increase to the $3.3 billion level.

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What We Have Achieved So Far(Dollars in Millions)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total

2001A 51.1 31.1 13.7 14.5 36.4 38.4 185.22001B 97.3 97.32002A 31.6 23.8 43.3 39.7 59.5 45.0 50.6 50.7 24.0 33.6 401.82002B 179.6 21.6 11.6 12.1 12.9 13.7 14.5 266.1Other 85.5Total 85.5 97.3 262.4 76.4 54.9 39.7 59.5 57.1 63.5 78.1 38.5 70.0 53.0 950.4

Potential 86 97 262 315 346 314 337 369 393 407 319 70 53 3368

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Energy Northwest Extension - To Date

050

100150200250300350400450500550600650700750800850900

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

($ M

illi

on)

2001-A Refunded 2001-B Refunded 2002-A Refunded 2002-B Refunded

2001-A Refunding 2001-B Refunding 2002-A Refunding 2002-B Refunding

BPA Capacity

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Transmission

• Infrastructure plan reflects an additional $775 million over BPA’s current 2002-2006 expenditure plan of $1.3 billion.

• Estimated use of the new facilities is expected to be high enough to generate sufficient revenue to recover the costs without rate increase.

Power

• Infrastructure plan reflects an additional $600 million over BPA’s current 2002-2011 expenditure plan of $670 million.

• Major investment categories include generation enhancements, reliability investments and hydro optimization.

• Conservation and Energy Web Funding capital requirements are $300 million over currently planned FY 2002-2006 expenditures.

Infrastructure Project

9

Bonneville Power Administration Infrastructure Has a Significant Effect onRemaining Borrowing Authority

10

Bonneville Power Administration Effect of Debt Restructuring on Remaining Borrowing Authority

Projected capital spending for FY02-12 from FY03 budget submittal and projected by staff for FY13-21.

-3400

-3200

-3000

-2800

-2600

-2400

-2200

-2000

-1800

-1600

-1400

-1200

-1000

-800

-600

-400

-200

0

200

400

600

800

1000

1200

1400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Before Debt Restructuring

After Debt Restructuring

11


FCRPS OUTSTANDI NG PRI NCI PAL BEFORE DEBT OPTI MI ZATI ON

0

2000

4000

6000

8000

10000

12000

14000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mil

lio

n $

ENW Principal Outstanding

Federal Principal Outstanding

Before Debt Optimization

12


Debt Optimization To-Date

FCRPS OUTSTANDI NG PRI NCI PAL WI TH DEBT OPTI MI ZATI ON TO-DATE

0

2000

4000

6000

8000

10000

12000

14000

Million $



13


Maximum Debt Optimization

FCRPS OUTSTANDI NG PRI NCI PAL WI TH MAXI MUM DEBT OPTI MI ZATI ON

0

2000

4000

6000

8000

10000

12000

14000

Million $



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