The Electric Light and Power System (EL&PS) Revenue Bonds, Series 2021, are being issued for the following purposes: (i) to fund acquisition, purchasing, construction, improvement, renovation, enlarging and/or equipping of property, buildings, structures, facilities, and/or related infrastructure for Lubbock Power & Light (LP&L or System), and (ii) to refund interim obligations issued for such purposes. On April 23, 2019, the City Council approved an ordinance authorizing the issuance of short-term (interim) obligations to fund LP&L’s capital program. On that date the City Council established an Electric Light and Power System Revenue Revolving Note Program (Note Program) and authorized the issuance of program obligations, from time to time, in an aggregate principal amount not to exceed $300 million. LP&L has utilized the Note Program to finance the significant investment in new power lines and substation construction related to a 69kV inner transmission loop, a 115kV outer transmission loop, and a 345kV interconnection to the Electric Reliability Council of Texas (ERCOT), along with other ongoing System improvements. Now that construction is nearing completion on the ERCOT interconnection, LP&L wishes to convert the interim obligations to long-term bonds. The majority of the anticipated issuance is related to transmissions costs that will be repaid from a new revenue stream, which is the recovery of System transmission expenses through a transmission cost of service (TCOS) rate. Additionally, non-transmission related System improvements will also be financed, and will be repaid using existing base rates. The proceeds of the bonds will be used to pay off the principal and interest of the notes issued through the Note Program with Bank of America, N.A. At its meeting on August 10, 2021, the City Council will consider a single-reading ordinance authorizing the issuance of the EL&PS Revenue Bonds, Series 2021. The notice will be published once a week for a period of thirty (30) days prior to the August 10th City Council meeting. The total amount of project costs financed with the 2021 Bonds will not exceed $320,000,000. The annual debt service payments for the 2021 Bonds are budgeted through the annual operating budget process and are included in the LP&L long-term financial planning and rate model. The annual debt service payments for the EL&PS Revenue Bonds are paid from the System revenues of LP&L. The first debt service payment on this issuance will not be due until FY 2021-22. |