Paducah Power System and Princeton Electric will lessen some financial strain after refinancing $211 million in bonds this week.
The two utilities make up the Kentucky Municipal Power Agency, which owns 7.82 percent of the recently troubled Prairie State Energy Campus.
Chief financial officer Heather Overby says KMPA officials planned to refinance just under $180 million, but received a more favorable-than-expected reaction in the bond market as related to rate recovery efforts at Paducah Power.
“If Paducah can’t pay KMPA, KMPA can’t pay the bondholders,” Overby said. “So they drilled all the way down to Paducah and looked very closely at Paducah and what was going on, and their action plan and do they feel like Paducah Power System is on the road to more stability, overall, I think. And they came up with yes.”
PPS customers have been battling high electric bills largely in part to the utility’s high debt levels and lower-than-predicted returns from its investment in Prairie State. Paducah Power makes up 84 percent of KMPA.
Overby said the refinancing locked in $17.8 million in savings over the life of the bonds, which extend through 2042. She said the bond savings are the centerpiece of KMPA's efforts to lower electric bills for members’ customers.
“We will take that $17.8 million, the majority is going to be taken over the first five years of the bonds, so that the power bill that I send the members – Paducah and Princeton – goes down,” Overby said.
The refinancing followed a week of marketing efforts by KMPA, its financial advisor Hilliard Lyons and its underwriter, Goldman, Sachs & Co.
