Central Coast Community Energy Secures Prepay Bond Issuance
October 31, 2023
Clean Energy Project Bonds to save $5M annually
Monterey, Calif., Oct. 31, 2023 – Central Coast Community Energy (3CE) secured its first prepay bond issuance to finance its clean energy supplies, resulting in significant cost savings for the agency and local customers. The $647.8 million bond issuance is projected to save 3CE customers nearly 11.4% in energy costs, which translates to $32.9 million in the cost of energy over the initial seven-year period of the bonds. The bonds received an invest-grade Aa3 rating from Moody’s and a “Green Bonds” designation from Kestrel.
Prepay bond issuance can reduce the cost of power with minimal risk. Tax-exempt bonds finance long-term energy supply purchasing, helping utilities and Community Choice Aggregators (CCAs) save money. This practice of using prepayment to buy natural gas has been used by municipal utilities for many years.
“I want to thank our Policy Board for its leadership in moving forward with the prepay bond issuance,” said Robert Shaw, 3CE CEO. “This accomplishment creates a roadmap for future transactions and positions us to deliver those savings directly to customers.”
In June 2021, four CCAs, including 3CE, formed the California Community Choice Financing Authority (CCCFA), a Joint Powers Agency to reduce the cost of power purchases through a pre-payment structure. These prepayments allow CCAs to reduce customer costs and increase funding available for local community programs.
A tax-exempt public electricity supplier (in this case, 3CE), a taxable financial counterparty, and a municipal bond issuer enter into a long-term supply agreement called a Clean Energy Project Revenue Bond to pre-purchase wholesale zero-emission clean electricity from sources like solar, wind, geothermal, and hydropower. The municipal bond issuer – in this case, CCCFA – issues tax-exempt bonds to raise the funds for the transaction, flowing the funds to the financial counterparty. The financial counterparty utilizes the bond funds and provides a discount to the CCA on the power purchases based on the difference between the taxable and tax-exempt rates.
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About Central Coast Community Energy
Central Coast Community Energy (3CE) is a public agency that sources competitively priced electricity from clean and renewable energy resources. 3CE is locally controlled and governed by board members who represent each community served by the agency. Revenue generated by 3CE stays local and helps keep electricity rates affordable for customers, while also funding innovative energy programs designed to lower greenhouse gas emissions and stimulate economic development. 3CE provides service to approximately more than 1 million people throughout the Central Coast, including residential, commercial, and agricultural customers in communities located within Monterey, San Benito, San Luis Obispo, Santa Barbara, and Santa Cruz counties. Learn more at 3CEnergy.org and on social media, including Facebook, Instagram, and Twitter.
For more information:
Central Coast Community Energy
Lena Watterson
Communications Specialist
831-641-7206
lwatterson@3ce.org