Bonneville Power Administration Overview As of February 9, 2018 - - PowerPoint PPT Presentation
Bonneville Power Administration Overview As of February 9, 2018 Grand Coulee Dam High Voltage Transmission Columbia Generating Station Grand Coulee Dam High Voltage Transmission Columbia Generating Station Moodys: Aa1/Stable S&P:
Grand Coulee Dam
High Voltage Transmission Columbia Generating Station
Moody’s: Aa1/Stable S&P: AA-/Stable Fitch: AA/Negative
Columbia Generating Station High Voltage Transmission Grand Coulee Dam
The information in this investor presentation is a summary of certain information concerning the Bonneville Power Administration (“BPA”) and is not intended to contain all information material to investors. This investor presentation is provided for your information and convenience only. This investor presentation does not constitute a recommendation or an offer
event shall BPA be liable for any use by any party of, or any decision made or action taken by any party in reliance upon the information contained herein. BPA makes no representations as to the legal, tax or accounting treatment of any BPA-supported
BPA-supported securities. Past performance is not indicative of future performance, which will vary. This investor presentation you are about to view is provided as of February 9, 2018. If you are viewing this presentation after February 9, 2018, there may have been events that occurred subsequent to such date that would have a material adverse effect
presentation. This investor presentation contains statements which, to the extent they are not recitations of historical fact, may constitute “forward-looking statements.” In this respect, the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe” and similar expressions are intended to identify forward-looking statements. A number of important factors affecting BPA’s business and financial results could cause actual results to differ materially from those stated in the forward-looking statements. Bonds supported by BPA’s financial obligations and the obligations of BPA providing such support are not nor shall they be construed to be general obligations of the United States of America nor are such bonds or obligations intended to be or are they secured by the full faith and credit of the United States of America.
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*Preliminary, subject to change; when, as, and if issued.
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Pricing Date* Settlement Date* 2018-A (Tax-Exempt) 2018-B (Taxable) $2,005,000* Use of Proceeds Ratings Syndicate Columbia Generating Station Aa1 (Stable) / AA- (Stable) / AA (Negative) February 22, 2018 $319,865,000* March 29, 2018 BofA Merrill Lynch, J.P. Morgan, Citigroup, Wells Fargo Securities Finance the cost of additions and improvements to Columbia Generating Station and to refund certain
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2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034
$Millions
Series 2018-A Series 2018-B Preliminary Energy Northwest 2018-A/B Amortization*
The Dalles Dam
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One Agency with Two Business Units Available Funding Sources Cost Recovery Unique Hydro- Based System
Power Services and Transmission Services revenue exceeded $3.6 billion in FY17 BPA’s customers primarily include utilities throughout the Pacific Northwest Revolving authority to borrow up to $7.7 billion from the U.S. Treasury $2.7 billion available at 9/30/2017 Non-Federal Debt (such as the Series 2018 Bonds) accounts for approximately half of BPA’s
total debt
BPA is required by law to establish rates to recover all costs FERC reviews and approves rates to assure that BPA rates recover all costs Virtually carbon-free - BPA markets power from 31 federally-owned hydroelectric projects and
several Non-Federal projects
Provides stability, flexibility and reliability to meet electric demands with limited fuel price risk
Non-Federal Payment Priority and Financial Reserves
Cash payments and monetary credits by BPA for Non-Federal Debt are met before payments
by BPA to the U.S. Treasury; Non-Federal Debt coverage has exceeded 2.0x since 2014
BPA maintains substantial cash and investment balances. When combined with a $750M U.S.
Treasury line of credit, BPA had 258 days of liquidity on hand as of Sept. 30, 2017
*Approximate; excludes inter-business line transactions between Power Services and Transmission Services. In support of its power marketing activities, Power Services obtains large amounts of transmission and related service from Transmission Services.
Customer Percentage of Sales* Snohomish County PUD No. 1 (Preference) 10% Cowlitz County PUD No. 1 (Preference) 7% City of Seattle, City Light Dep't (Preference) 7% Pacific Northwest Generating Cooperative (Preference) 6% Tacoma Power (Preference) 5% Total 35% Power Services Top 5 Customers (FY17) Customer Percentage of Sales* Puget Sound Energy Inc. (IOU) 12% PacifiCorp (IOU) 11% Portland General Electric Company (IOU) 9% Powerex Corp. (Power Marketer) 7% Avangrid Renewables LLC (Wind Developer) 5% Total 44% Transmission Services Top 5 Customers (FY17)
Power Services
Transmission Services
Region
Top Customers by Business Unit
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*As of 9/30/2017; totals may not add due to rounding.
aggregate) to borrow from the U.S. Treasury
facilities ($2.17B)
appropriated by Congress to construct the Federal System BPA’s liabilities to Energy Northwest are part of the Regional Cooperation Debt Program which extends Energy Northwest debt to pay down federal liabilities or preserve federal borrowing capacity.
Payments/Credits other than to the U.S. Treasury
issues to the U.S. Treasury
funded capital investments in the Federal System
U.S. Treasury Payments
high interest federal appropriations repayment obligations
Energy Resource Authority, and Port of Morrow)
(No priority implied among Non-Federal payments)
to the U.S. Treasury
Federal Debt such as the Series 2018 Bonds
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*Operating Year 2019 statistics as of December 2017. Operating Year runs through July, which differs from BPA’s Fiscal Year, which runs through September.
historically low water conditions
have a high probability of occurring from year-to-year
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the hydroelectric system above firm energy is seasonal surplus (secondary) energy
(secondary) energy varies with annual precipitation and weather conditions
amount is estimated to be 1,806 aMW (Operating Year 2019)
average as of February 8, 2018
(secondary) energy is an important part of BPA’s ratemaking and risk mitigation
approximately 9% of BPA’s total revenues of $3.6 billion (FY17)
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Chief Joseph Turbine Wind Farm Irrigation
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1. Organic Statutes BPA is required by law to establish rates that recover all of its costs, including amounts for Non-Federal Debt and lower payment priority Federal Debt 2. Two Year Rate Cases BPA’s rate process ensures a thorough basis for proposed rates. BPA has elected to conduct a rate case every two years
least a 95% Treasury Payment Probability over the two year rate period 3. FERC Ensures Rates are Adequate FERC reviews rates primarily to ensure they are sufficient to recover costs 4. Cost Recovery Obligation is Carried Forward Under its cost recovery obligation, if BPA were unable to meet all of its costs in a period because its rates (together with its financial reserves) were insufficient, BPA would be required to recover the un-met costs in future rates
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1. Overnight Access to Treasury BPA has overnight access to a $750 million line of credit with the U.S. Treasury 2. Cost Recovery Adjustment Clause BPA rates include provisions to increase Power Services’ and Transmission Services’ rate levels -without undertaking a formal rate process - if Reserves Available for Risk (RAR) fall below $0 for Power Services or $99 million for Transmission Services. When implemented, the CRAC allows BPA to collect additional revenues up to $300 million per year for Power and $100 million per year for Transmission within the rate period 3. Defer Treasury Payment By law, BPA must defer its U.S. Treasury payments to meet Non- Federal obligations 4. Fish & Wildlife Adjustment BPA rates include provisions to increase Power Services’ rate levels within a rate period to recover adverse cost impacts arising from the Endangered Species Act litigation 5. Expedited Rate Case BPA may initiate, and believes it would be able to complete within 6 months, an expedited rate case to propose increased rates to recover costs
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measure of accumulated cash flow derived and retained from operations
that puts a framework in place through which rate levels will be established to maintain an aggregate minimum RAR of approximately $400 million
72% chance that the Power CRAC will trigger for application to FY19 rate levels
credit for expenses with the U.S. Treasury (no
that BPA relies on to mitigate financial risk
1 Days Liquidity on Hand, defined to be (RAR + Available U.S. Treasury Short-Term Expense Line of Credit)/(Operating Expenses/360). 2 FY18 year-end forecast as of 12/31/2017: The primary driver for the RAR decline after removing carryover cash flow effects is a reduced expectation for
Power Services’ revenue due to a reduction in Preference Customer loads resulting from mild winter weather in FY18.
3 Forecasted FY18 Days Liquidity on Hand is unavailable because BPA does not prepare forecasts of certain Operating Expenses used in the calculation.
Fiscal Year Reserves Available for Risk U.S. Treasury Line of Credit Days Liquidity on Hand1 2013 $641 $750 303 2014 $784 $750 317 2015 $845 $750 347 2016 $602 $750 281 2017 $568 $750 258 2018 Est2 $411 $750 n/a3
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This metric consists of RAR as well as cash derived other than from operations. As of September 30, 2017 BPA had $766 million of Total Financial Reserves
1 This information is presented in more detail in Official Statements for BPA-backed, Non-Federal Debt bond issuances. BPA’s audited financial statements do not include
a similar table.
2 Operating Expenses include the following items from the Federal System Statement of Revenues and Expenses: Bonneville O&M, Purchased Power, Book-outs, Non-
Federal entities O&M-net billed, Non-Federal entities O&M non-net-billed, and the Residential Exchange Program. Operating Expenses do not include certain payments to the Corps and Reclamation.
($ millions excluding ratios)
FY2017 FY2016 FY2015 1 Total Operating Revenue 3,570 3,433 3,404 2 Less Operating Expense2 1,842 1,735 1,654 3 Net Funds Available for Debt Service 1,728 1,698 1,750 4 Non-Federal Debt Service 330 332 306 5 Non-Federal Debt Service Coverage Ratio 5.2x 5.1x 5.7x
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Debt Service Coverage was above historical ranges in FY15, FY16, and FY17
Repayment Obligations in FY17, $959 million in FY16, and $229 million in FY15, over the amounts
high Non-Federal Debt Service Coverage. In FY11 through FY13, which immediately preceded the RCD program, coverage ranged between 2.2x and 2.5x. BPA can provide no assurance regarding future Non-Federal Debt Service Coverage levels
Average Rates for Power Sold to Preference Customers & Federal Agencies (Excludes Associated Transmission Costs)
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variances in stream-flows and hydro-generation.
from sales of firm energy and transmission services
average as of February 8, 2018
*Historical average (1928-2017) of 132 Million Acre Feet (MAF) at The Dalles Dam. Streamflow reflects BPA’s
BPA Operating Revenues and Expenses ($millions) Comparison to Streamflow (% of Average*)
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Celilo Converter Station Central Ferry LoMo Harvalum-Big Eddy Line
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Proposed Capital Investment ($ millions)
*AFUDC - allowance for funds used during construction.
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$0 $20 $40 $60 $80 $100 $120 $140 $160 FY 18* FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 FY 29 $0 $200 $400 $600 $800 $1,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 ($ millions) Columbia Project 1 Project 3
9/30/2017
federal income tax
in addition to refinancing and/or extending certain debt
Bonds supported by BPA are not general obligations of the United States of America and are not secured by the full faith and credit of the United States of America
*As of 9/30/2017. Debt service is shown net of certain forward sales of uranium fuel that was .purchased with bond proceeds. *CGS capital needs for FY18 have been funded from prior issuance.
Energy Northwest Revenue Bond Debt Service* CGS Expected Capital Improvements ($ millions)*
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integrated debt management approach that can provide substantial benefits to the Region’s ratepayers
extend the average weighted maturities of outstanding bonds to match more closely the originally expected useful lives of the financed facilities
by reducing the outstanding principal amounts of bonds issued by BPA to the U.S. Treasury
debt outstanding or its aggregate average weighted maturity
issuances through 2020 could exceed $1.1 billion (excludes new money issuances for the Columbia Generating Station) RCD Intra-Year Cash Management
approval, Energy Northwest periodically enters into lines of credit to fund capital expenditures
manage RCD and intra-year cash flows between BPA and Energy Northwest at any one time are not expected to exceed $600 million
pay operating expenses and interest payments of Energy Northwest, allowing for earlier prepayment of higher interest federal appropriations repayment
million of additional savings to BPA in FY18 and FY19
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*Preliminary, subject to change
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