I wish I could promise that this will be the most boring post you're ever going to read on this blog. Sadly, however, my capacity to be boring has as-yet unplumbed depths. This post's sole saving grace is that I'm going to talk about $30 million.
At last week's community energy meeting, Jay Bartlett, chief engineer at CWLP, mentioned that within the past few weeks, CWLP went to New York to issue the second round of the municipal bonds that fund the construction of the new power plant. (See! I told you it was going to be boring. But just wait--it gets unboring in a minute.) Apparently, what they do when this happens is they do some sort of presentation to investors and, in particular, the two big bond-rating houses (Moodys and ... someone else? these are the groups that grant A or AA or B status to bonds, which is an indication of how risky they are) about why we're a good place for investors to put their money. Municipal bonds are not flashy performers--they're one of the low-risk, low-performance places that you put your safe money. (NOTE: I am not a financial expert. I keep all of my money in the garden.)
So CWLP talked with the money people for a couple of hours. In Bartlett's words, about half of the time was spent talking about the clean energy plan. At the end, they opened the bond up, and it was instantly oversubscribed by a factor of four. That means four times as many people wanted to buy in as were able to. So, CWLP closed the bond down, and reissued it with a lower interest rate. (This seems like cheating to me, but I'm sure that's because I keep my money in the garden.) Anyway, even at the lower interest rate, the bond was still oversubscribed by a factor of four. Bottom line: People really want to give us money.
No, I'm kidding, that's not the bottom line. The bottom line is that lowering CWLP's interest rate on these bonds works basically the same way as lowering the interest rate on your mortgage: your monthly payment is less, and at the end of your mortgage, you've paid less in interest. Where does that leave CWLP?
Paying $1 million less on the bond per year over its entire 30-year lifetime. Which means that CWLP is saving the city $30 million on the coal plant.
Now, I would love it if I could say that this is entirely due to the clean energy plan. However, investors don't give reason, so there's no way to know for sure. However, if you bear in mind that these investors are looking for a safe place to put their money, and you realize that the financial sector is coming around to seeing climate change, and associated regulations, as essentially one ginormous risk, it's not hard to see how the plan would have appealed to them, as it provides a healthy financial padding for CWLP against the costs of future greenhouse gas regulations.
But, whatever the cause, let's give CWLP a round of applause for getting us a better deal for our mortgage this bond.