CHICAGO -- Omaha Public Power District is bringing $110 million of subordinate-lien refunding bonds to market, marking the Nebraska district's first deal since its nuclear plant came back online.
Once one of the highest-rated utilities in the country, the still highly rated OPPD has taken a dent to its credit due to Fort Calhoun Nuclear Station's unexpected 2.5-year outage.
Ratings analysts said the extended outage, which cost the district $340 million, proves some of the risks associated with nuclear energy.
The OPPD plans to sell the bonds to retail buyers on July 21 and 22 with an institutional order period set for July 23. Morgan Stanley is the senior manager.
The bonds are secured by a lien on the district's revenues that is subordinate to operating and maintenance costs and payments on senior bonds. Standard & Poor's rates the subordinate debt AA-minus and Moody's Investors Service rates it Aa3.
Moody's downgraded the district by one notch in September 2013, citing problems and costs associated with the plant shutdown.
S&P maintains an AA rating on the district's senior-lien debt, making it one of the rating agency's highest-rated utilities.
The bonds will refinance debt originally issued in 2005, 2006, and 2007.
Final maturity is 2042.
In an Internet roadshow outlining the deal, district officials touted the district's focus on fiscal responsibility, its diverse customer base, and its future strategic plans for environmental compliance.
The OPPD is the nation's twelfth-largest utility.
Its competitive position is strengthened by Nebraska's status as an all-public power state that prohibits investor-owned utilities. The district also enjoys the ability to set its own rates, and the board has unanimously improved every proposed rate increase over the last nine years, according to Edward Easterlin, the district's ice president for financial services and chief finance officer.
The nuclear station sits along the Missouri River 20 miles north of Omaha. The district shut it down in April 2011 for regularly scheduled maintenance, but a major flood followed by a fire extended the shutdown. Federal nuclear regulators increased their scrutiny of all American nuclear plants after the Fukushima nuclear disaster in Japan, and the district struggled to meet to address regulatory violations.
The station came back online in late December 2013, said Easterlin. After the outage, the district hired Exelon Generation Company LLC to help get it back online and take over management.
The outage cost $341 million, Easterlin said. The district expects to recover half of that by 2016 with rate increases, and the remaining costs over a 10-year period through 2023, he said.
The CFO also noted that the district has a new environmental compliance strategy that reduces carbon emissions from its existing coal plants, which generate roughly 50% of the district's overall energy.