Public Power Financing

Orrick has the leading public power practice in the country with attorneys in five of its offices specializing in this area.

Since 1985, members of the Public Power Group have participated in more than 575 tax-exempt financings aggregating more than $106 billion in twenty-five U.S. states and territories, plus more than 95 taxable financings aggregating more than $55 billion for Federal power agencies and rural electric cooperatives. Orrick works with a broad range of issuer clients such as state agencies, small and large cities, districts, and joint action agencies, as well as with 9 of the 20 largest public power systems. We also work with the largest electric utility in the country (the Tennessee Valley Authority), the largest retail municipal utility in the country (City of Los Angeles Department of Water and Power) and the second largest wholesale municipal utility in the country (Intermountain Power Agency). Orrick's depth and breadth of experience enables it to provide clients with innovative approaches to financing public power projects, which not only recognize each client's unique needs, but solve each client's unique problems as well.

Our attorneys have been involved in drafting legislation in twenty states authorizing local distribution systems to join together into statewide or regional joint action agencies for the purpose of participation in large-scale generation and transmission projects. In addition to drafting the enabling legislation, our attorneys have been involved in drafting organization agreements, charters and by-laws for these new entities.

Members of Orrick's public power practice structured the financial and contractual arrangements for most of the major joint action agencies and helped to structure the first joint ownership arrangements for generation and transmission facilities between public power issuers and investor owned utilities. They have been instrumental in negotiating and drafting numerous take-or-pay and take-and-pay power sales contracts including the analysis of the validity of such contracts under various state statutes. Orrick's public finance tax specialists help develop financing structures which take advantage of state-of-the-art financing techniques and assist clients in understanding the sometimes ambiguous rules of the Internal Revenue Code.

  • Projects completed to date include traditional fossil-fueled generating plants; nuclear plants; hydroelectric facilities; geothermal, wind, waste and other alternate energy facilities; major transmission facilities; coal mines and gas wells; rail cars, barges, tugboats, gas pipelines and other fuel transportation facilities; power, transmission and fuel prepayment financings; and buy outs of uneconomic fuel contracts. In addition to traditional debt financings, we represent power issuers in sale leasebacks, cross border leases, swaps, hedges, futures contracts and other derivative transactions, and the acquisition of investor owned utility systems and assets.

    Our attorneys have worked on individual transactions for public power issuers ranging in size from under $1 million up to $4 billion. Some of the solutions we have provided our clients with include:

    • Procuring favorable IRS rulings for clients that have resulted in new financing opportunities and structures or significant savings on their bond issues;
    • Creating a technique to finance construction of co-generation facilities for independent power producers with the municipal client obtaining long-term capacity and energy without owning and operating the facilities;
    • Developing a structure that permits the tax-exempt financing of gas reserves in the ground;
    • Obtaining a private letter ruling from the IRS permitting the tax-exempt financing of a substantial up-front payment for electric generation capacity under a long-term, firm power purchase contract; and
    • Participating in the creation and management of the Energy Efficiency Revenue Bond Program (an energy conservation program payable from energy saving revenues) for the State of California, which won an Innovations Award from the Council of State Governments.