A California state authority issued $958 million in bonds to fund renewable energy projects in the state.
The issuer sold about $944 million as a term bond due May 1, 2054. The term bond yields 4.53% and has a coupon rate of 5.5%. The remainder of the securities mature between 2025 and 2028, with yields between 4.44% and 4.5%. The bonds received a rating of A2 from Moody’s Investors Service.
The bonds will finance the sale of energy to the Clean Power Alliance (CPA) of Southern California, a renewable energy provider in the southern portion of the state. CPA will use the proceeds of the bonds to pre-pay for thirty years of electricity. Under the terms of the agreement, it will pay less than it would otherwise have paid for such electricity.
CPA aims to “address climate change by reducing energy-related greenhouse gas emissions by serving customers with renewable energy at competitive rates, providing local economic benefits such as jobs creation and workforce development opportunities, and offering energy programs to its customers and communities,” according to the official statement accompanying the sale of the bonds.
The issuance comes amid several California efforts to mitigate the effects of climate change. Last year, Governor Gavin Newsom signed a law committing to net-zero carbon emissions by 2045.
CPA provides service to 32 communities in Southern California, with plans to expand to three more cities next year. Last year, it sold 11,373 gigawatt hours (GWh) of electricity to approximately one million customers, grossing about $868 million in revenue. Total electricity generation for California was about 278,000 GWh in 2021. The bonds will be backed by CPA revenue.
Goldman Sachs & Co LLC served as underwriter on the issuance, purchasing the bonds for $999 million. The price reflected a premium of $43 million.