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Bassett Unified School District hired PFM as financial consultant in early 2011. The District was contemplating a Power Purchase Agreement (PPA) proposal from a vendor and needed assistance with the evaluation of the financing terms of the agreement. The original proposal contemplated the generation of nearly 100% of the District’s current energy needs at every site. Had the proposal been accepted as originally proposed, the District would have obligated their general fund to purchasing all of the output of a system that produced more power during the peak periods than they were likely to use. Our professionals quickly identified the unlikely need for the entire proposed system and then went to work to assist in evaluation of the project’s appropriate sizing from a financing standpoint on a site-by-site basis.
In order to demonstrate a more appropriate sizing for the District, we first defined each site’s current electricity usage and utility price per kilowatt hour to establish a baseline, or "no solar" model. From there we evaluated the financial impact of reduced project sizes to achieve the desired reduction in utility cost, while still assuring that the District does not produce more energy than it is likely to use. This part of the analysis clearly indicated that several sites were not viable locations for projects. Furthermore, due to the rate tariff structure analysis tool that we used for this engagement, we were able to suggest a much smaller size at the high school in order to achieve greater financial benefit. Once the sizing was reasonable for the District’s needs, we worked with staff to identify negotiation points in the proposed contract along with desirable terms for the District.
Our participation with the District staff and project team included participation at several Board meetings to educate and inform the Board as to the considerations that needed to be taken into account. A final report was prepared as a part of the Board packet. The report provided a summary of the final proposed terms contrasted against the "no solar" baseline, and another funding option available to the District, Qualified Zone Academy Bonds (QZABs). The Board decided to move ahead with the more reasonably sized project under the PPA financing arrangement. PFM’s analysis saved the District over $25 million from the original proposal to the final approved project.
These materials are based on factual information from actual projects that The PFM Group of companies has engaged in for a client. They are for general information purposes only and are not intended to provide specific advice or a specific recommendation. The results of individual projects will vary significantly depending upon the size and structure of each transaction, permitted investments, prevailing market conditions at the time of the transaction, and other events or circumstances beyond our control. Past performance does not necessarily reflect and is not a guaranty of future results. The information contained in these case studies is not an offer to purchase or sell any securities.