1. Powering Down: MEAG and Santee Cooper
13 November 2018
Powering Down: MEAG and Santee Cooper
Debtwire Municipals journalists and analysts discuss prospects for two important Southeast utilities

2. AGENDA Opening Remarks: Background/History: Recent Developments: Q&A
Yong Lim, Desk Editor
Background/History:
Greg Clark, Head of Municipal Research
Recent Developments:
Patrick Ferguson, Senior Reporter
Q&A

3. BACKGROUND/HISTORY: MEAG (I)
Joint action agency created under state law in 1975.
Generating mix includes coal, oil, gas, and previously constructed nuclear facilities.
Vogtle nuclear plants 3&4 were preceded by Vogtle nuclear facilities 1&2.
In May 2005, Vogtle 1&2 co-owners agreed to construct Vogtle 3&4.

4. BACKGROUND/HISTORY: MEAG (II)
In April 2008, Georgia Power Company (GPC), agent for the co- owners, contracted with Westinghouse and other parties to build Vogtle 3&4.
Co-owners of Vogtle 3&4 are GPC (45.7%), Oglethorpe Power Corporation (30.0%), MEAG, (22.7%), and Dalton, Georgia (1.6%).
Oglethorpe is an electric co-op owned by 38 electric distribution utilities in Georgia.
In March 2010—prior to construction—commercial operation of Vogtle 3&4 units was expected April 2016 and April 2017, respectively.

5. BACKGROUND/HISTORY: MEAG (III)
Construction of Vogtle 3&4 began March 2013 and November 2013.
By August 2015, commercial operation dates were delayed to 2Q19 and 2Q20.
Westinghouse filed for Chapter 11 bankruptcy in March 2017.
Later that year, GPC and other co-owners, with approval of the Georgia Public Service Commission, decided to continue Vogtle 3&4 construction with Bechtel as primary contractor.
Estimated completion dates are now November 2021 and November 2022.

6. BACKGROUND/HISTORY: MEAG (IV)
Project completion was 69.9% as of 31 July, but actual construction was 55.3%.
On 8 August 2018, cost increases of USD 2.2bn were announced for Vogtle 3&4. MEAG’s share of these costs is USD 500m.
On 26 September 2018, the co-owners agreed to continue construction.
As part of the agreement, GPC agreed to assume a greater share of the liability if project costs continue to increase.
MEAG signed 20-year power purchase contracts for Vogtle 3&4 power with JEA (f/k/a Jacksonville Electric Authority) and PowerSouth.

7. BACKGROUND/HISTORY: MEAG (V)
JEA is a component unit of the City of Jacksonville.
PowerSouth is a cooperative that serves 20 members in Alabama and northwest Florida.
Although JEA and PowerSouth each signed 20-year contracts to purchase Vogtle 3&4 power, neither has voting rights regarding Vogtle 3&4 continuation.

8. BACKGROUND/HISTORY: MEAG (VI)
In a 17 August letter to MEAG’s CEO, JEA’s interim CEO demanded that MEAG vote to cancel Vogtle construction.
On 24 August, MEAG’s CEO responded that he expected JEA to meet its contractual agreements.
MEAG noted in its 24 August letter that cancellation of Vogtle 3&4 would be an event of default on its US Department of Energy (DOE) loans, giving DOE the option to accelerate debt incurred via those agreements.
If DOE took that action, it would lead to acceleration of MEAG’s J, M, and P bonds.

9. BACKGROUND/HISTORY: MEAG (VII)
Security for Vogtle bonds
Project M Bonds
Take-or-pay power sales contracts with MEAG’s Project M participants, which agree to collect annual taxes sufficient to make required payments.
Project J Bonds
Take-or-pay agreement with JEA for 20 years, beginning with the respective commercial operation dates of Vogtle 3&4. If either unit is canceled or terminated, JEA is obligated to pay 50% of any remaining acquisition and construction costs. JEA’s payments to MEAG are JEA’s operating and maintenance expenses and senior to debt service on JEA’s own bonds.
Project P Bonds
PowerSouth’s obligation for Project P bonds is similar to JEA’s for Project J bonds.

10. MEAG Debt Excluding Vogtle Debt
Moody’s
S&P
Fitch
Debt Outstanding (USD 000)*
Project One Senior
290,525
Rating
A1 (stable)
A (negative)
Last Reviewed
21 April 2016
28 September 2018
10 August 2018
Project One Subordinated
1,565,878
A2 (stable)
A- (negative)
General Resolution Senior
119,000
General Resolution Subordinated
509,947
Combined Cycle Project
182,900
7 April 2015
* As of 31 December Figures are not adjusted for unamortized premium or discount and include current portions of long-term debt.

11. Debt Outstanding (USD 000)*
MEAG Vogtle Debt
Moody’s
S&P
Fitch
Debt Outstanding (USD 000)*
Vogtle Project M
1,023,940
Rating
A2 (stable)
A (negative)
Last Reviewed
8 October 2018
28 September 2018
10 August 2018
Vogtle Project J
1,427,440
Baa3 (negative)
11 October 2018
18 September 2018
Vogtle Project P
457,920
Baa2 (stable)
BBB+ (negative)
A- (negative)
Department of Energy Loans
Project M
Not rated
497,201
Project J
337,313
Project P
363,235
* As of 31 December Figures are not adjusted for unamortized premium or discount and include current portions of long-term debt.

12. Project J Bonds Series Type Issued (USD 000) Outstanding (USD 000)
Maturities
Capitalized Interest
Reserve Fund
2015A
Fixed-rate tax-exempt
185,180
1 July
Yes, but not specified in Sources & Uses of Funds
Yes
2010A
BABs
1,224,265
1,223,800
1 April
2010B
Tax-exempt
24,170
7,045
1 April
TOTAL
1,443,615
1,416,025

13. UPDATE: MEAG Higher expected costs announced in August trigger vote
JEA publicly opposes project
Politicians weigh in
Nature of co-owners’ contract changes, Georgia Power takes on more risk
Credit downgrades of MEAG, JEA and City of Jacksonville

14. CHALLENGES GOING FORWARD: MEAG
MEAG vs. JEA lawsuits
Pending lawsuits in Duval County, Florida, and Atlanta, Georgia
Battle for venue: Georgia or Florida?
JEA’s petition to the Federal Energy Regulatory Commission (FERC)
Public power utilities wary of FERC involvement

15. BACKGROUND/HISTORY: SANTEE COOPER (I)
State-owned utility created in Advisory Board includes the governor and other state officials.
Began electric power operations in 1942.
Primary generation source is coal, supplemented by natural gas, nuclear, and purchased power.
Sells power on both a wholesale and retail basis. Largest customer is Central Electric Power Cooperative, which provided 59% of Santee Cooper revenues.
Other wholesale customers provide 4% of revenues, retail 23% and industrial 14%.

16. BACKGROUND/HISTORY: SANTEE COOPER (II)
Summer 2&3 nuclear plants were preceded by Summer No. 1, which began service in 1983.
On 23 May 2008, South Carolina Electric & Gas (SCE&G) and Santee Cooper signed a construction agreement with a consortium consisting of Westinghouse and Stone & Webster.
Ownership shares were 55% (SCE&G) and 45% (Santee Cooper).
Originally expected completion dates for Summer 2 and 3 were April and January 2019, respectively.

17. BACKGROUND/HISTORY: SANTEE COOPER (II)
By October 2015, respective completion dates were August and August 2020.
Westinghouse filed for Chapter 11 bankruptcy in March 2017.
On 31 July 2017, construction of Summer 2&3 was suspended.

18. Debt Outstanding (USD 000)*
Santee Cooper Debt
Moody’s
S&P
Fitch
Debt Outstanding (USD 000)*
Revenue bonds
7,367,045
Rating
A2 (negative)
A+ (negative)
A+ (negative watch)
Last Reviewed
17 August 2018
21 August 2018
7 March 2018
Unenhanced commercial paper
464,984
Prime-1
Not rated
Not applicable
* As of 31 December 2017.

19. UPDATE ON SANTEE COOPER
Potential sale of Santee Cooper
Political climate around Santee Cooper
Dominion Energy’s proposal to buy SCANA
Ability of Santee Cooper, utilities to charge customers for unfinished nuclear project

20. Bond Prices – MEAG M, J, P, JEA, and Santee Cooper Since 2 August 2018

21. Bond Prices – MEAG M, J, P Since 2 August 2018

22. Q&A

23. Debtwire reports on corporate debt situations before credit ratings are changed. Offering unique insights, credit analysis, debt data, and analytics for distressed debt and leveraged finance markets.
Follow corporate debt situations as they unfold
Find mandate opportunities in stressed/ distressed/restructuring situations, ahead of the market
Get real-time news on market-moving events sent to your mobile or
Subscribers choose Debtwire for speed and depth of coverage they can’t get anywhere else. Our reporters talk to an impressive range of contacts every day to bring you valuable early insight into fast evolving situations.
Get the full story on restructurings and the players involved
Understand how regulatory developments are affecting asset-backed securities
To complement your newsfeed, Debtwire’s credit analysis and research teams provide deep technical details and angles that help you understand situations more clearly.
Capture early stage primary opportunities and stay on top of the leveraged market
EMEA
10 Queen Street Place
London
EC4R 1BE
United Kingdom
Americas
1501 Broadway
8th Floor
New York
NY USA
Asia
Suite
Grand Millennium Plaza
181 Queen’s Road, Central Hong Kong
Disclaimer
We have obtained the information provided in this report in good faith from publicly available data as well as Debtwire data and intelligence, which we consider to be reliable. This information is not intended to provide tax, legal or investment advice. You should seek independent tax, legal and/or investment advice before acting on information obtained from this report. We shall not be liable for any mistakes, errors, inaccuracies or omissions in, or incompleteness of, any information contained in this report, and not for any delays in updating the information.
We make no representations or warranties in regard to the contents of and materials provided on this report and exclude all representations, conditions, and warranties, express or implied arising by operation of law or otherwise, to the fullest extent permitted by law. We shall not be liable under any circumstances for any trading, investment, or other losses which may be incurred as a result of use of or reliance on information provided by this report. All such liability is excluded to the fullest extent permitted by law.
Any opinions expressed herein are statements of our judgment at the date of publication and are subject to change without notice. Reproduction without written permission is prohibited. For additional information call Debtwire Analytics at (212)
Copyright 2018 S&P Capital IQ (and its affiliates, as applicable). This may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poor's. Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES. OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.