History

The Sam Rayburn Municipal Power Agency (the "Agency") is a municipal corporation and political subdivision and body politic and corporate of the State of Texas and organized under the laws of the State of Texas. It was created in 1979 by concurrent ordinances adopted by the governing bodies of its Members, the cities of Jasper, Liberty, and Livingston, Texas. The Agency was formed to undertake the planning, financing, development, acquisition, and operation of projects for the generation and transmission of electric power and energy to supply the present and future needs of its Participants, including the Members and the Town of Vinton, Louisiana, through the Vinton Public Power Authority (VPPA).

Prior to November 1980, the Members and VPPA obtained all of their power requirements from the Sam Rayburn Dam Electric Cooperative, Inc. (SRDEC). SRDEC supplied such power from its entitlement to the output of 52 megawatts (MW) of hydroelectric power from the federally-owned Sam Rayburn Dam Hydro Project (Sam Rayburn Dam Project), marketed by the Southwestern Power Administration (SWPA), United States Department of Energy, and from wholesale power purchased from Gulf States Utilities Company (GSU), now known as Entergy Gulf States Louisiana, L.L.C. (EGSL) and Entergy Texas Inc. (ETI).

Beginning in 1980, however, the Member Cities and VPPA purchased all of their power and energy requirements from the Agency.  Also in 1980, the Agency arranged to acquire a 20 percent undivided interest in the Nelson Coal Power Station Unit 6 (Nelson 6) and, at the same time, the Agency also entered into agreements with GSU which provided for: (a) the transmission by Entergy Corporation of the output of Nelson 6 and the Sam Rayburn Dam Hydro Project (Sam Rayburn Dam Project) to the Agency's delivery points; (b) the sale by GSU of the supplemental power and energy required to satisfy the Agency's current load and normal load growth in excess of the Agency's resources; and (c) the supply by GSU of reserve capacity, backup energy, and replacement energy.  The Agency issued bonds to finance the construction of the Town Bluff Hydropower Project, later renamed the Robert D. Willis Hydro Project (R.D. Willis Project), and the acquisition of Nelson 6 Excepted Facilities in 1985.  On December 1, 1989, the Agency began selling 24.89 percent of power received from the R.D. Willis Project to the SRG&T under the Town Bluff Hydro Project Power Assignment Agreement (SRG&T Agreement). This agreement is in place for a 32-year period ending December 1, 2021.

In 1992, the Agency transferred title to its 20 percent undivided interest in Nelson 6 and certain other Excepted Facilities to VPPA. Concurrently, the Agency and VPPA entered into an agreement whereby the Agency secured rights from VPPA to the net electrical output of Nelson 6 and, in return, paid all charges billed by EGSI related to Nelson 6.

In 1993, the Agency issued $153,420,000 of Power Supply System Revenue Refunding Bonds, Series 1993A, and on $89,595,000 of Power Supply System Revenue Refunding Bonds, Series 1993B, thereby refunding its then outstanding debt.

In 1994, Entergy Corporation merged with Gulf States Utilities Company and reformed the operating entity as Entergy Gulf States, Inc. (Entergy). Entergy became responsible for all outstanding contracts between GSU and SRDEC and SRMPA. During Fiscal Year 1998, the Agency exited the generation business and signed the Requirements Power Supply Agreement (RPSA) with Entergy Power Marketing Corporation (EPMC).  That agreement was subsequently assigned to Entergy Wholesale Operations Marketing, L.P. (EWOM).  Under the RPSA, the Agency capacity for a lump sum payment in 1998 and continues purchases of delivered power and energy significant to meet Participant requirements under a set price schedule. This price schedule escalated at an average of approximately 1.6 percent per annum, from the effective date through September 30, 2021. Since November 1, 1998, the Agency has obtained its required power and energy from SRDEC (Sam Rayburn Dam Project), SWPA (R.D. Willis Project), and EWOM. The RPSA allowed the Agency to reduce electricity rates to its Participants from an annual average of 76 mills per kWh to 70 mills per kWh in Fiscal Year 1998. The Agency further decreased its rates to the Participants during Fiscal Year 2001. Implementation of the RPSA eliminated income variability caused by Nelson 6 operations and maintenance risk. It allowed the Agency to stabilize wholesale power costs at 70 mills per kWh and further reduced it to as low as 65 mills per kWh at the beginning of Fiscal Year 2001 due to the expenses, operating fund levels and the power supply rates outlined in the RPSA.

In July 2010, EWO Marketing, Inc. (EWOM) and SRMPA entered into the SRMPA Full Requirements Power Supply Agreement for the City of Liberty’s Boomerang Tube load. Boomerang Tube is a new large industrial customer, steel pipe and tube production facility, of the City of Liberty. SRMPA entered into this agreement, in parallel to the RPSA, to supply Liberty with the electric energy that Liberty needs to satisfy its new obligation. The agreement to serve Liberty’s Boomerang Tube facility will be in effect until September 30, 2021.

On September 19, 2012, the Agency issued $108,940,000 of Power Supply System Revenue Refunding Bonds, the Series 2012 Bonds, and defeased all of the Agency’s outstanding Series 2002 Bonds. The Series 2012 Bonds were issued under a refunding plan to refinance under a new indenture all of the Agency’s outstanding debt. The Agency’s outstanding debt prior to this refunding was $136,225,000 Power Supply System Revenue Refunding Bonds.  Issuance of the Series 2012 Bonds allowed the Agency to: (a) revise certain bond covenants, including reduction of the Agency’s required cash holdings, allowing those funds to be utilized for the repayment of principal coincident with issuance of the Series 2012 Bonds; and (b) make the repayment period of the Series 2012 Bonds coterminous with the Agency’s RPSA in 2021.  In addition, the debt service schedule under the Series 2012 Bonds significantly reduced debt service requirements.

The Agency and VPPA began concept development of a separate wholesale power enterprise called the “Cambridge Project” prior to 2010. The Cambridge Project is distinct and separate from the Agency’s primary wholesale power supply mission serving its three Member cities, although the project compliments the Agency’s performance. The Agency’s revenues, funds, and accounts established under the Indenture are not comingled with Cambridge Project accounts and are not available to the Cambridge Project enterprise. The Cambridge Project is independent from the Agency’s existing operations that secure the Agency’s payment obligations to holders of the 2012 Bonds. During Fiscal Years 2010 and 2011, the Agency and VPPA were engaged in discussions with Entergy operating companies regarding additional power supply and purchase arrangements that became effective in early Fiscal Year 2012 on December 1, 2011. The new power supply contractual arrangements (i) enable the Cambridge Project to obtain four new wholesale loads and (ii) provide the Agency with firm power supply for the next 25 years to serve its three Member cities (under the SRPSA). The four wholesale loads are two large oil refineries, a chemical company and Entergy Texas Inc. (“ETI”). The two oil refineries and the chemical companies are served through VPPA. The Cambridge Project supplements the existing Agency Systems and the VPPA Systems under the RPSA.  In addition to the aforementioned wholesale loads, the Cambridge Project includes additional power supply resources consisting of generation from third parties and power supply purchases from Entergy Gulf States Louisiana LLC (“EGSL”) and from EWOM. The power purchase agreement with EWOM is referred to as the Supplemental Requiremetns Power Supply Agreement (SRPSA) and, in addition to serving wholesale loads of the Cambridge Project, it assures an energy supply to the Agency beyond the 2021 termination of the RPSA to 2035 and provides that, if the Agency has load growth above the anticipated rate, EWOM will provide service for such load. Should any of the Cambridge Project contractual arrangements be terminated, all Cambridge contracts will terminate and the Agency and VPPA Systems will revert to their original condition with wholesale energy provided under the RPSA for the Agency to serve its participating Member cities.