Moody’s Investors Service affirmed the Minnesota Municipal Power Agency’s A3 rating but revised its outlook to stable from positive ahead of a $100 million revenue bond sale slated for next week.
The power agency is selling two series, one for $79 million and a second for $25 million. The rating reflects the agency’s market position as a cost-competitive power provider to its municipal customers predominately located in the Minneapolis-St Paul region. It has 11 municipal members.
“The stable outlook reflects expectations for stability in generation loads and financial profile over the next few years,” Moody’s wrote.
The agency has independent rate-setting ability as well as protections in its power sales contracts. The agency was established in 1992 to provide an economical and reliable supply of electric energy for its members.
Proceeds of the sale will finance construction of the Oak Glen Wind Farm project and other renewable energy-generation projects. They also will fund debt-service reserves and refinance a term loan. The bonds are secured by a pledge of the system’s net revenues. The agency must set rates to meet 1.15 times coverage of annual debt service.
The projects are driven by Minnesota legislation that requires power agencies to increase their renewable generation to 25% by 2025 from 7 % in 2011.
