ML20003G665
| ML20003G665 | |
| Person / Time | |
|---|---|
| Site: | Seabrook  |
| Issue date: | 04/15/1981 |
| From: | Bloomberg S, Hunneman R VERMONT, STATE OF |
| To: | VERMONT ELECTRIC COOPERATIVE, INC. |
| Shared Package | |
| ML20003G664 | List: |
| References | |
| NUDOCS 8104300459 | |
| Download: ML20003G665 (6) | |
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STATE OF VERMONT PUBLIC SERVICE. BOARD Docket No. 4538 Petition of Vermont Electric I
Hearing at Cooperative, Inc. for consent to X Burlington, Vermont issue long-term secured indebted-X April 7, 1981 ness in the principal amount of* I S9,900,000 X
Order Entered: 4/15/81 PRI'~NT:
Rosalyn Hunneman Samuel S. Bloomberg Board Members APPEARANCES :
William B. Piper, Esq.
Downs, Rachlin & Martin For Petitioner Gerald R. Tarrant, General Counsel Department of Public Service For Director of Public Advocacy INTRODUCTION This proceeding concerns a petition filed by Vermont Electric Cooperative, Inc. ("VEC") pursuant to 30 V.S.A. 5108.
On March 30, 1979, the Public Service Board (" Board")
issued an order in Docket No. 4363 consenting to the issuance of up to $20,000,000 of long-term secured indebtedness to.the United States of America acting through the Administrator of the Rural Electrification Administration ("REA") for a term of 35 years, at 5% interest.
On March 11, 19 81, VEC moved for a supplemental order in Docket No. 4363 consenting to the financing which is the subject of this docket.
VEC sought the agreement of the Vermont Attorney General and the Director for Public Advocacy that such a supplemen-tal order be issued without additional hearing.
On March 26, 1981, the Director for Public Advocacy wrote to the Board requesting that
!a hearing be held and suggesting that a new docket be assigned.
Thereafter a' new docket was assigned and a hearing date set.
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Natice of h00 ring woc ccnt to intOrcatCd p rtica and tha
- hearing was held on April 7, 1981, in the Contois Auditorium, City
' Hall, Burlington, Vermont.
The matter is ready for decision.
FINDINGS 1.
At the hearing, Jerry L. Bucholz, Controller of VEC, testified with respect to the terms of the financing; and William I allagher, VEC's manager, testified concerning the NEPOOL planned G
generating units which VEC intends to invest in with the proposed
, loan proceeds.
2.
Mr. Bucholz testified that VEC was unable to close
!the loan which was the subject of Docket No. 4363 despite its best efforts to do so, and therefore the financing which is the subject I
of this docket is necessary.
3.
The basic loan terms provide that VEC will issue long-term secured indebtedness in the amount of $9,900,000 under the REA guaranteed loan program.
The source of funds in the REA guaranteed loan program is the Federal Financing Bank ("FFB").
4.
FFB is a lending institution created by the United States Treasury in 1973 pursuant to the Federal Financing Bank Act 12 U.S.C.A. 52281 et seg. to coordinate borrowings by feder.al agencies.
FFB will borrow money from the United States Treastry and lend it to VEC.
- REA will guarantee and administer the FFB loan,
5.
REA's guarantee will be secured by a mcrtgage from VEC covering all of VEC's property.
6.
The specific terms of the loan are as follows:
I a.
The loan is in the amount of 59,900,000 for a
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term of 34 years with a 7 year principal deferment.
j The interest is payable at the FFB interest rate.
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(3) b.
VEC nust provida REA with o OchCdulG Of C0tiCOtCc.
cdvanc:a cnd may drcw down tho lonn con 31ctent with this schedule only after VEC has been billec.
for the project costs to be covered by the advance.
'The FFB note permits VEC to select the maturity c.
date for repaying each advance.
At the time of the advance, VEC may select (1) a short-term maturity date of from two years to seven years after the date of the advance or (2) a long-term maturity date of thirty-four years after the end of the calendar year in which the advance was made.
If VES selects a short-term maturity date, it may select (a) additional short terms of at least two years, as long as the selected additional maturity dates are not later than seven years after the date of the initia] advance, or (b) a long-term maturity date of thirty-four years after the end of the calendar year in which the advance was made.
Maturing short-term advances must be converted to long-term (or repaid) if more than five years have passed since the date of the original advance.
d.
Interest does not begin to accrue on an advance until an advance is made.
The interest rate applicable to each advance or extension of matnrity date on the FFB note is determined at the time of the advance or extension in accordance with the terms of the note.
These rates change dcoending on the current interest rate for United States Treasury Bills.
If the long-term FFB interest rate does not appear to be attractive, VEC can elect to pay the short-term interest rates for periods of not less than two years and then exer-cise its option again.
This may be doneEmaiodically until the seventh year after the advance.
At this time VEC must either repay the advance or accept the then current long-term interest rate.
This flexibility allows VEC to take advantage of the lowest possible FFB interest rates in connection-with this financing.
7.
The proceeds of the loan will be used to finance joint ownership interests of VEC in certain NEPOOL planned nuclear generating units.
The units involved are Seabrook Units 1 and 2, Pilgrim Unit 2 and Millstone Unit 3.
Both Mr, Gallagher and Mr.
Bucholz testified that in their opinions those units would be built and operating licenses will be issued on or close to schedule.
They also testified that they estimated that the annual long-term
- composite interest rate of the funds to be borrowed through the l
l FFB-REA guaranteed loan program and funds previously borrowed for t
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j for cimilcr purpocco would ba cpproxicctoly 9.5%.
Thcy furthcr testified that VEC would realize savings of approximately $4.5 million by using the FFB-REA loan funds to purchase additional interests in the NEPOOL units when compared to purchasing equiva-lent capacity from Central Vermont Public Service Corporation and Green Mountain Power Corporation.
Finally, they testified that in
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their opinions the loan and proposed use of proceeds were prudent for VEC.
8.
Generation loans by REA borrowers must now be made through the FFB-REA guaranteed loan program.
9.
Mr. Bucholz explained the sequence of events that lead to this loan.
By the terms of the loan commitment as extended VEC must execute and return the note by May 5, 19 81, when the FFB loan commitment expires.
10.
As a condition for its approval, REA does not require that the Board approve the specific uses to which the loan funds will be put.
11.
Based upon the foregoing findings and the evidence of record in this proceeding, the Board finds that the financing that is the subject of this Docket will be consistent with the general good of the State of Vermont.
ORDER IT IS HEREBY ORDERED, ADJUDGED AND DECREED by the Public 1
l Service Board of the State of Vermont that:
The Board hereby consents to the issuance of secured indebtedness to the Federal Financing Bank in the principal amount I' of $9,900,000 pursuant to an agreement between the Federal Financir g i
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'Brnk cnd the Administrator of the Rural Electrification Administra-tion dated August 14, 1974, as amended, with interest payable from the date of each advance on the unpaid principal balance at the Federal Financing Bank interest rate.
Dated at Montpelier, Vermont this 15 day of April,19 81.
)
) PUBLIC SERVICE
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/s/
Rosalyn Hunneman
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BOARD
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OF VERMONT
/s/
Samuel S. Bloomberg
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OFFICE OF THE CLERK FILED:
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?.TTEST :
/s/
Susan M. Hudson CLERK OF THE BOARD l
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SUSAN M.
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, Clerk of the Public Service Board of the State I
of Vermont, having by law the custody of the seal and all the records, books, documents and papers of, and appertaining to said Board, hereby certify that the pages hereto attached are a true copy of i
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FINDINGS AND ORDER ENTERED ON APRIL 15, 1981 IN PSB DOCKET NO. 4538 l
IN RE: PETITION OF VERMONT ELECTRIC COOPERATIVE, INC. FOR CONSENT TO ISSUE LONG-TERM SECURED INDEBTEDF.ESS IN THE PRINCIPAL AMOUNT OF q
39,900,000,
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as fully and completely as the same appear by the original files and records of said Board.
- l Given under my hand, and the seal of said Board I
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PSB NO. 4538 COPY OF r
FINDINGS & ORDER ENTERED: 4/15/81 In re Petition of VEC, Inc.
for consent to issue long-term secured. indebtedness in the principal amount of S9,900,000
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