# Presentation: 924781

## BPA Debt Restructuring Presentationto theEnergy Northwest BoardAudit, Legal, and Finance CommitteeMarch 28, 2002

## Refresher on Debt Restructuring

- Debt Restructuring Program resulted from the examination of Federal and non-Federal debt as single portfolio to be optimized in terms of cost and access to capital.
- The heart of the program is to:
- Extend the tax-exempt Energy Northwest (ENW) debt to the 2013-2018 period.
- Use the cash savings from the lower ENW amortization to advance amortize Treasury bonds.
- Issue short maturity Treasury bonds for new capital to allow advance amortization and avoid costly call premiums.
- The results of the program, if carried out to the maximum potential, will be to:
- Replenish Treasury borrowing authority by up to $3.3 billion between 2001-2012.
- Reduce BPA’s total interest expense by an average of over $20 million per year through 2018, a net present value savings of over $240 million (using a 6.5% discount rate).

## Program Objectivesas of June, 2000

- BPA is proposing to undertake a program of prudent debt management that:
- Reduces total debt service costs of BPA and lowers rates to ratepayers,
- Sustains delivery capability of capital programs, and
- Allows more variable rate debt as recommended by Energy Northwest.

## Potential Program Magnitudeas of June 2001

- Maximum size of program is $1-2 billion, if Federal amortization opportunities are limited to Power.
- If Debt Optimization proceeds can be applied to Transmission amortization, the program could expand to $2-3 billion.
- Given uncertainties about other sources of funding, BPA would like to preserve all cash flow opportunities in the near-term.

## Results Update

- Four bond sales have been completed to date.
- Approximately $950 million of cash flow from the Energy Northwest debt extensions to date will be used to amortize additional Federal debt.
- $183 million of additional Federal amortization  has been made (FY 2000/01) to alleviate the pressure on borrowing authority.
- A public process on inter-business line transactions (“interfunctional loan”) is planned to test the use of debt extension proceeds for transmission investments, which would allow the potential of the program to increase to the $3.3 billion level.

## What We Have Achieved So Far(Dollars in Millions)

## Energy Northwest Extension - To Date

**BPA Capacity**

## Infrastructure Project

- Infrastructure plan reflects an additional $775 million over BPA’s current 2002-2006 expenditure plan of $1.3 billion.
- Estimated use of the new facilities is expected to be high enough to generate sufficient revenue to recover the costs without rate increase.
**Power**
- Infrastructure plan reflects an additional $600 million over BPA’s current 2002-2011 expenditure plan of $670 million.
- Major investment categories include generation enhancements, reliability investments and hydro optimization.
- Conservation and Energy Web Funding capital requirements are $300 million over currently planned FY 2002-2006 expenditures.

**Infrastructure Project**

## Infrastructure Has a Significant Effect onRemaining Borrowing Authority

## Effect of Debt Restructuring on Remaining Borrowing Authority

- Projected capital spending for FY02-12 from FY03 budget submittal and projected by staff for FY13-21.

- -3400

- -3200

- -3000

- -2800

- -2600

- -2400

- -2200

- -2000

- -1800

- -1600

- -1400

- -1200

- -1000

- -800

- -600

- -400

- -200

- 0

- 200

- 400

- 600

- 800

- 1000

- 1200

- 1400

- 2000

- 2001

- 2002

- 2003

- 2004

- 2005

- 2006

- 2007

- 2008

- 2009

- 2010

- 2011

- 2012

- 2013

- 2014

- 2015

- 2016

- 2017

- 2018

- 2019

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- 2021

- Before Debt

- Restructuring

- After Debt

- Restructuring

## Before Debt Optimization

**Before Debt Optimization**

## Debt Optimization To-Date

## Maximum Debt Optimization