Grant PUD's $77 million refinance hits budget goal, improves customer fairness
EPHRATA — Grant PUD has refinanced $77 million in outstanding debt to reduce finance costs, help hold a planned 2018 rate-revenue increase to 2 percent, and more equitably align debt burden to the life of the assets it finances — a big fairness boost to customers.
“This transaction increases customer value by spreading the debt burden over the multiple generations who will benefit from the equipment upgrades it financed,” Bonnie Overfield, senior manager of Finance, said.
The transaction refinances bonds of varying maturity dates through 2023 into a single new issue of 30-year bonds. The sale became final Dec. 20.
The deal does not add to Grant PUD’s $1.3 billion in debt, Overfield said. It locks in an interest rate that will reduce long-term debt liability by approximately $12 million, and saves $1 million-to-$1.5 million in consulting, underwriting and staff time by refinancing the older bond issues as single, “advanced-refunding” transaction.
The debt restructuring comes just ahead of proposed federal tax reforms that, if approved as currently proposed, would prohibit advanced refunding, potentially increasing refinancing costs by millions.
Fast action by Grant PUD’s financial team and executive managers identified the costly risk of waiting to restructure the debt, and completed this complex deal weeks before a vote on the proposed tax reforms.
“A significant amount of credit is due also to PUD commissioners for having the insight and faith in staff to authorize and execute this financing,” Overfield said. “It’s a win-win for both the PUD and our customers.”
Become a Subscriber!
You have read all of your free articles this month. Select a plan below to start your subscription today.
Already a subscriber? Login
