| MMWEC provides its members and project participants
with a wide range of financial expertise and services, from financial
analysis, project financing and accounting services, to investment
management, budgeting and financial reporting services. These services
are employed in managing the approximate $900 million in outstanding
MMWEC bonds as well as the other financial resources of the MMWEC
organization. Bond
Issues
MMWEC has the authority to issue tax-exempt revenue bonds for
several purposes, including the purchase of ownership shares in
electric generating facilities. MMWEC has issued its bonds to
finance and refinance its ownership interests in several power
plants, as represented in eight MMWEC Power Supply Projects. Security
for the bonds is provided through Power Sales Agreements (PSAs)
between MMWEC and its project participants. Under the PSAs, project
participants are obligated to pay their share of principal and
interest on the MMWEC bonds, as well as other project operating
costs.
Financial Management
Through its accounting, treasury and budgeting departments, MMWEC
manages the financial assets of the MMWEC organization and provides
its members with various financial services. These departments
are involved in the investment and management of bond proceeds
and debt service payments; the preparation of data and reports
to meet regulatory, financial and other reporting requirements;
and the preparation and management of company and individual Power
Supply Project budgets. MMWEC maintains various credit facilities,
including a line of credit to finance oil purchases for the Stony
Brook plant, and others that provide liquidity support for power
contacts and agreements. Financial services also involve the aggregation
and reconciliation of members’ power supply bills, as well
as the maintenance of working capital, rate-stabilization and
other accounts for municipal utilities.
Credit Ratings
MMWEC interacts with the major credit rating agencies in the process
of establishing credit ratings on the various MMWEC Power Supply
Projects and in an effort to enhance the financial standing of
the MMWEC organization and it municipal utilities. Currently,
MMWEC receives ratings from the Standard & Poor’s, Moodys
and Fitch credit rating agencies. MMWEC also assists individual
municipal utilities in obtaining independent credit ratings, which
are often needed to provide financial assurance for power purchase
contracts.
Risk Management
MMWEC has implemented an Enterprise Risk Management Program
that helps to identify, assess and address the organization’s
business risks. The program involves the creation and maintenance
of a prioritized, risk inventory, and work with the Audit Committee
of the MMWEC Board of Directors to develop and implement action
plans to address risks.
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