THE WOODLANDS, Tex. - Developing a prepaid market for electricity among public utilities will take more time and effort than it took to create a similar market for long-term natural gas contracts. But there is a place for locking in electricity purchases over several years, experts told The Bond Buyer's third annual Prepaid Energy Contracts Conference here.
Since 2003, when Internal Revenue Service rulings opened the door to tax-exempt bond financing of long-term energy contracts, public utilities have done 33 prepaid gas deals worth $23 billion, said Mark Shea, principal at Banc of America Securities LLC. Over the same period of time, public utilities have done only three prepaid electricity deals worth $1.8 billion, despite the fact that the largest public electric utility represents 3.5 times the revenue of the largest gas utility, he said.