PUD Board pursues cost reduction through refinancing of long-term debt

February 24, 2006

The Board of Directors for Columbia River People’s Utility District (PUD) approved a resolution authorizing PUD staff to pursue the issuance of tax-exempt Revenue Obligations to advance refund one of the PUD’s three outstanding bond issues. The resolution states that the Revenue Obligations will not be sold unless they produce a present value debt service savings for the District of at least five percent.

Presently, refunding of the Series 2000B Revenue Obligations would result in a savings of more than $280,000 over the life of the debt, meeting the required five percent savings hurdle. Favorable bond market interest rates make the refunding attractive at this time.

“We are always looking for ways to keep rates as low as possible” said PUD Board President Carol Everman. “Reducing costs for long-term debt is a key component of that effort. Opportunities to save over $280,000 in interest don’t happen very often.”

It is possible that fluctuation in bond interest rates could result in a decision to terminate the refunding, which is planned for the latter part of March. Staff and the Board will actively monitor bond rates to determine if it is prudent to follow through with the refinancing.

The bulk of the savings from the refinancing is structured to occur in the next four years, helping to keep PUD rates lower in the near term.

The new Revenue Obligations would be underwritten by Banc of America Securities, LLC, and be available for purchase locally. The sale is tentatively scheduled for March 20th. Please contact the PUD or your local investment advisor for more information regarding opportunities to purchase these Obligations.

Presently, the PUD has outstanding debt of $18.2 million, comprising:

• $5.3 million in General Obligation Refunding Bonds, Series 1996. These bonds were an advance refunding of the bonds initially issued to purchase the distribution system from PGE in 1984. When paid off in 2009, the District will see cost reductions of $1.4 million annually.
• $7.3 million in Electric System Revenue Obligations, Series 2000A. These Obligations were issued to pay off a line of credit drawn on to pay for the cost of acquiring additional service territory and facilities from PGE in August 2000.
• $5.6 million in Electric System Revenue Obligations, Series 2000B. These Obligations were issued to reimburse the PUD for capital improvements.