MMWEC provides a wide range of financial expertise and services to help its Members and Project Participants manage their financial affairs and risk exposures in a cost-effective manner. Some of the MMWEC services include financial analysis, project financing and accounting services, as well as investment management, budgeting and financial reporting services. These services are employed in managing the approximate $640 million in outstanding MMWEC bonds as well as other financial resources MMWEC, its Members and Project Participants.

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.

Additionally, the insurance services department is responsible for the annual renewal and maintenance of all of MMWEC’s property and casualty insurance programs.

Enterprise 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 works with the Audit Committee of the MMWEC Board of Directors to develop and implement action plans to address risks.

Commodity Management
The Treasury and Commodity Management department is charged with managing all tradable commodities. This encompasses hedging the open market power positions of Member utilities through forward physical and financial power purchases, project fuel requirements, emission and renewable credits, and cross commodity hedging activities. To facilitate these actions, MMWEC has established and will continue to establish trading relationships with commodity-related counterparties.

MMWEC staff purchases the fuel and makes the fuel transportation arrangements needed to bring natural gas and No. 2 oil to the Stony Brook power plant, which is capable of burning both fuels to produce electricity. Stony Brook’s fuel facilities include two, 8.4-million-gallon oil tanks. In 2002, MMWEC completed construction of a 5.6-mile, 20-inch-diameter natural gas pipeline to serve the Stony Brook plant.

MMWEC also has negotiated and entered into numerous bulk power contracts with various suppliers on behalf of Member utilities, which purchase their share of the contracted resources from MMWEC. Contracts providing for the transmission of electricity from the point of generation to the point of use also are negotiated by MMWEC.

Debt Issuance
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.

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, Moody’s 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.