At DC Water, we're always thinking about how we can do things better. That certainly includes our Finance and Procurement Division which has made the Authority an industy leader in the pursuit of innovative financing to fund critical infrastructure projects and reduce the burden on our customers.
Here are a few examples of innovative financing models implemented over the past few years.
DC Water has been a leader in Green Bonds since its inaugural issue in 2014 to pay for a portion of the Clean Rivers program. For more information see: https://www.dcwater.com/green-bonds
100 Year Century Bond - 2014
Issued for the $2.7 billion Federally-mandated Clean Rivers Project that will reduce combined sewer overflows to the Potomac and Anacostia rivers and Rock Creek by 96 percent. The project will also reduce flooding in the District.
$350 million taxable issuance:
- First of its kind for a utility for generational equity (matches assets with liabilities)
- Bonds will be paid back over 100 years, the useful life of the Clean Rivers tunnels
- Engineers certified that the useful life of the tunnels is 100 years
Environmental Impact Bond - 2016
$25 million "Pay For Success" model to determine if green infrastructure could achieve a reduction in stormwater and combined sewer overflows.
- Private placement agreement with two investors (Calvert Social and Goldman Sachs)
- Structured with multi-modal variable rate bonds for flexibility with an initial five-year mandatory tender
- Performance risk share or outcome payment due at the mandatory tender date depending on the performance of the Green Infrastructure
Forward Purchase Agreement - 2020
$300 million forward delivery to be complete in July 2022:
- Refunded Series 2012 A and C bonds for lower interest cost
- $64 million in budget savings
- Mechanism for settlement in two years
- Used to bridge the gap between capital expenditures and the issuance of long-term debt
- Also used as a contingency where CP can be used as a possibility for financing innovative projects
Resource & Recovery Solar Projects
Solar at Blue Plains:
- Reduces the operating costs for power from FY22 estimated grid cost of $0.082 per kWh to an average of $0.027 per kWh
- Projected savings of $500K per year from 2020 to 2040
WIFIA Loan - 2021
$156 million for rehabilitation and replacement projects:
- 20 projects bundled at U.S. Treasury rates administered by the EPA
- Low interest rate locked at 2.33% for 40 years
- Projects funded include Gravity Thickeners Upgrade, Small Diameter Water Main replacements and more