Calif. CCAs Issue First Ever Clean Energy Bonds Valued At More Than $2 Billion

by Paul Ciampoli
APPA News Director
December 6, 2021

Three California community choice aggregators (CCAs) have issued California’s first ever municipal non-recourse Clean Energy Project Revenue Bonds through the California Community Choice Financing Authority (CCCFA). The two separate bond issuances are valued at over $2 billion for thirty-year terms.

The three CCAs are East Bay Community Energy, Marin Clean Energy (MCE) and Silicon Valley Clean Energy. The two Clean Energy Project Revenue Bonds will prepay for the purchase of over 450 megawatts of renewable energy.

These transactions will reduce renewable power costs by almost $7 million annually for the first 5-10 years, according to the CCAs.

They noted that a Clean Energy Project Revenue Bond is a form of wholesale electricity prepayment that requires three key parties: a tax-exempt public electricity supplier (the CCA), a taxable energy supplier, and a municipal bond issuer.

The CCAs enter into long-term power supply agreements for clean electricity sources like solar, wind, geothermal, and hydropower.

The municipal bond issuer — in this case, CCCFA — issues tax-exempt bonds to fund a prepayment of energy that is to be delivered over 30 years. The energy supplier utilizes the bond funds and provides a discount to the CCA on the power purchases based on the difference between the taxable and tax-exempt rates. This discount is historically in the range of 8-12%, and minimum discounts are negotiated for each transaction.

The first of these bonds, which was issued by CCCFA for the benefit of East Bay Community Energy and Silicon Valley Clean Energy, was underwritten by Morgan Stanley. It successfully generated nearly $1.5 billion in proceeds, after having received an investment grade “A1” rating from Moody’s Investors Service and a “Green Climate Bond” designation from Kestrel Verifiers, making it the largest ever issuance of prepayment bonds for clean electricity.

The second transaction, issued by CCCFA for the benefit of MCE, was underwritten by Goldman Sachs. The bond sale produced approximately $700 million in bond proceeds. The issue received an investment grade “A2” rating from Moody’s and a “Green Climate Bond” designation from Kestrel Verifiers.

CCCFA was established in 2021 with the goal of reducing the cost of power purchases for member CCAs through pre-payment structures. The founding members of CCCFA include Central Coast Community Energy, East Bay Community Energy (EBCE), MCE, and Silicon Valley Clean Energy.

EBCE is a not-for-profit public agency that operates a community choice energy program for Alameda County and fourteen incorporated cities, serving more than 1.7 million residential and commercial customers.

MCE provides electricity service and programs to more than 540,000 customer accounts and more than one million residents and businesses in 37 member communities across four Bay Area counties: Contra Costa, Marin, Napa, and Solano.

Silicon Valley Clean Energy provides electricity from renewable and carbon-free sources to more than 270,000 residential and commercial customers in 13 Santa Clara County jurisdictions.

The American Public Power Association has initiated a new category of membership for community choice aggregation programs.