While pre-paid, long-term natural gas purchases by consortiums of public-sector utilities are still attracting attention, at least one major muni financing arm, the Southern California Public Power Authority (SCPPA), has moved away from prepaid gas. Instead, SCPPA is adding natural gas reserves and carrying out almost a perpetual bidding program for new renewable projects.

The state-chartered joint powers authority also is helping members seek federal economic stimulus funds for some smart grid and thermal energy storage projects.

“We’re just starting to survey our member utilities to see if its time for another round of buying more gas reserves,” said Bill Carnahan, SCPPA executive director, noting that a half-dozen members have teamed up to obtain reserves in Wyoming and Texas during the past four years (see Daily GPI, Nov. 30, 2007; Nov. 15, 2006). Gas pre-pay purchases are not as attractive these days, he said.

Continuing global financial woes are not a factor as far as SCPPA and its members are concerned, Carnahan said. “We’ve done a lot of restructuring of some of our debt to lower our exposure, although we were never at a great deal of risk, and we never were penalized, but some of our deals involved [the troubled global insurance company] AIG and it was pretty shaky there for awhile. We had to restructure some deals to take them out of the deals. Again, we took the risk away.”

Carnahan said SCPPA was preparing to sell probably $600-700 million in bonds for renewable projects in the next six months, and he said the financing arm “doesn’t expect to have any problem raising that money.”

“We’ve put our request for proposals [RFP] on our website as sort of a perpetual RFP,” Carnahan said. “Developers can bring a project to us any time, and we’ll take a look at it.”

The website contains one renewables RFP asking for submittals by Oct. 30.

During the past two years SCPPA has had to restructure at least a couple of its wind power project when investment tax credit investors dried up with the souring of the global economy. “When Wall Street fell apart, there weren’t any tax investors left,” Carnahan said. “We had to restructure those deals, and what happens is we now have the option of acquiring the projects; otherwise, they might not be able to build it.”

Some of the wind projects, totaling more than 300 MW, that Carnahan once thought were fully launched turned out to need restructuring, and SCPPA will have some refinancing to do in October, December and March.

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