The Public Energy Authority of Kentucky (PEAK) sold $653.8 million in bonds to finance the purchase of a long-term supply of natural gas.
The bonds mature between 2025 and 2055, yielding between 4.12% and 4.3%. They pay interest at 5%. The securities received a rating of A2 from Moody’s Investors Service.
The authority will use the bond proceeds to buy thirty years worth of natural gas from Aron Energy Prepay 28 LLC, a subsidiary of Goldman Sachs & Co LLC. PEAK will in turn sell that gas to its member municipalities. Gas deliveries will begin in November of this year and run monthly, through March 2055.
The commitment to fossil fuels runs deep in Kentucky, where coal once anchored the state’s economy. But as other major coal-producing states invested in renewable energies, Kentucky’s energy mix has remained dominated by coal, oil, and natural gas. In 2022, the state ranked last in the country in wind and solar energy production, according to the U.S. Energy Information Administration. The official statement accompanying the sale of the bonds—which runs 220 pages—does not mention renewable energy, wind or solar power, or the words “climate change.”
PEAK is organized by the Kentucky cities of Carrollton and Henderson, and provides energy throughout the state. The bonds are special, limited obligations of the authority, payable by revenue from natural gas sales.
Goldman Sachs served as lead underwriter on the issuance, purchasing the bonds for $676 million. The price reflected a premium of $24.8 million and a discount of $2.6 million. Municipal Capital Markets Group, Inc acted as financial advisor.