Massachusetts public power agency closes bond deal for solar project
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The Massachusetts Municipal Wholesale Electric Company has closed on its first issue of green bonds under its own name to complete the long-term financing of a solar energy project on its Ludlow, Massachusetts, campus.
So-called green bonds are earmarked to be used exclusively for climate and environmental projects. The $15 million negotiated deal was underwritten by Janney Montgomery Scott and rated AA-minus by Fitch Ratings. MMWEC did not obtain external verification for the green bond designation.
The transaction was Janney’s first Massachusetts lead managed deal since 2008 and its first lead managed power issue, the firm said.
MMWEC
The proceeds of the bond issue finance the MMWEC Master Sergeant Alexander Cotton Memorial Solar Project in Ludlow. It’s named after a member of the 439th Airlift Wing at the nearby Westover Air Reserve Base who died of pancreatic cancer in 2020.
The 6.9-megawatt, 35-acre Cotton Solar project will generate more than 13,800 megawatt hours per year, enough to power over 1,500 homes,
Fitch’s AA-minus rating reflects the credit quality of the two biggest participants in the project: Ipswich Electric Light Department, which owns 34.8% of the output, and Peabody Municipal Light Plant, which owns 29.0%. Four other municipal utilities— in Boylston, Mansfield, Marblehead and Wakefield — have signed identical take-or-pay power sales agreements with MMWEC, which Fitch said “are absolute and unconditional,” whether or not the plant is built and operable. Fitch said debt service coverage is nearly 12 times.
The bonds were not rated by Moody’s Investors Service or S&P Global Ratings.
The project was completed in April 2023 and is awaiting final approval by the Federal Energy Regulatory Commission to enter commercial operation, “which is expected in the near term,” Fitch said. The project will help the six participating utilities in meeting the state’s emission targets of 50% non-carbon power supply by 2030, 75% by 2040 and net-zero emissions by 2050.
MMWEC, the state’s designated joint action agency for municipal utilities, has sold green bonds before but not on its own, the agency said.
It has sold about $100 million of green bonds in the past through the Berkshire Wind Power Cooperative Corporation, which owns and operates a 12-turbine, 19.6–megawatt wind farm at Brodie Mountain in Hancock, Massachusetts. That project, which started commercial operation in May 2011, consists of MMWEC and 16 municipal utilities. The project is the second largest operating wind farm in Massachusetts, capable of producing enough electricity to power 7,800 homes while offsetting the production of nearly 800,000 metric tons of carbon dioxide and the use of 1.45 million barrels of oil.
“MMWEC is pleased to be able to offer all Massachusetts municipal utilities the opportunity to add more carbon-free energy to their power portfolios through its ability to finance these projects,” said MMWEC Chief Executive Officer Ronald C. DeCurzio.
Nixon Peabody was bond counsel on the deal, which priced Dec. 14. PFM Financial Advisors was municipal advisor.
