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Home > About Us > Company > Board of Directors

November 2008 Board Meeting Minutes

 

November 13, 2008

 

 

                        The regular meeting of the Board of Directors of the Omaha Public Power District was held in the Board Room on the Atrium Level of Energy Plaza East, on November 13, 2008, at 10:00 a.m.

 

                        Present were Directors M. J. Cavanaugh, N. P. Dodge Jr., J. K. Green, G. C. Hall, A. L. McGuire,  J. R. Thompson, F. J. Ulrich and D. D. Weber.  Also present were W. G. Gates, President; M. C. Bodammer, Corporate Secretary; and S. G. Olson and S. M. Bruckner, General Counsel for the District.  Mr. Ulrich, Board Chair, presided, and Mrs. Bodammer, Corporate Secretary, recorded the minutes.  Other members of Management present were D. J. Bannister, T. J. Burke, A. J. Minks, C. P. Moriarty, D. F. Widoe, G. R. Williams, J. J. Hanson, M. R. Jones, J. W. Thurber, A. M. Davis, L. L. Kapustka, T. R. Monroe, and R. C. Shaneyfelt.  Others present were C. E. Perkins of I.B.E.W. Local Union #763; D. F. Begley of I.B.E.W. Local Union #1483, Steve Jordan from the Omaha World-Herald; J. Tritsch and J. Petr from Kutak Rock, the District’s Bond Counsel and Underwriters’ Counsel, respectively; C. Snider from Barclays Capital Inc.; B. Beavers from Ameritas Investment Corp.; and approximately four customer-owners and employees of the District. 

 

                        The Corporate Secretary read the following:


 

“Notice of the time and place of this meeting was publicized by notifying the area news media; by  publicizing  same in the Omaha World-Herald and Outlets; by  displaying  such  notice on the Arcade Level of Energy Plaza since November 7, 2008; and by mailing such notice to each of the District’s Directors on that same date.

 

“A copy of the proposed agenda for this meeting has been maintained, on a current basis, and is readily available for public inspection in the office of the District’s Corporate Secretary.

 

“Additionally, a copy of the Open Meetings Law is available for inspection in the public meeting book located in this meeting room.”          


 

                        It was moved and seconded that the Board reviewed the September 2008 Comprehensive Financial and Operating Report and that the minutes for the last meeting be approved.  The vote was recorded as follows:  McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; and Ulrich - Yes.  The motion carried.


 

Thereafter, the Corporate Secretary read the following:

 

“Persons wishing to address the Board on a particular item are asked to approach the microphone as that agenda item is discussed.  Comments will be heard following Board discussion of the item and prior to a vote by the Board.”

 

                        The following resolutions were then read, and upon motion duly seconded, were placed on roll call.  The vote on each resolution is indicated following the description of that resolution.

 

                        The next order of business was the Board’s consideration of the Separate Electric System Revenue Bonds (Nebraska City), 2008, Series A.

 

Director Dodge reported that in October 2008 the Board of Directors authorized the District to proceed with preparations to sell up to $51 million of Separate Electric System Revenue Bonds (Nebraska City 2), 2008, Series A (hereinafter referred to as NC2 2008 Series A Bonds) which will be used to pay a portion of the Participants’ costs for the construction of Nebraska City Station Unit 2.  He said that figure has been reduced to $21 million because two of the Participants (Nebraska Public Power District and Falls City) have elected to pay cash for their final allocations.  Director Dodge reported Moody’s Investors Service has rated the Bonds A1 and Standards and Poor’s Rating Services has rated the Bonds as A.  Director Dodge reported these are the underlying ratings of the Participants as a group.  He commented that, due to the size of this particular bond issue, insurance to a AAA rating is not available.  Thereafter, Director Dodge discussed the specifics of the NC2 2008 Series A Bonds stating the issue size is $21 million and maturities will range from 3 to 31 years.  He added the Bonds are callable at par in nine years and that six local, regional and national brokerage firms were involved in the sale of the Bonds with interest rates ranging from 2.85% in 2011 to 5.80% in 2039. 

 

Director Dodge stated there will be two resolutions presented during the meeting:  one (Resolution No. 5738) creates the Bonds and the second (Resolution No. 5739) authorizes the sale of the Bonds.  He said the Board received Resolution No. 5738 on November 8 and has had the opportunity to review the lengthy resolution. Thereafter, Director Dodge requested that a motion be made to dispense with reading the resolution. 

 

The Corporate Secretary read a motion to dispense with the reading in full of Resolution No. 5738 as follows: 

 

 

 

                        “BE IT RESOLVED THAT, because a copy of Resolution No. 5738 and the Preliminary Official Statement incident to the NC2 2008 Series A Bonds have been furnished to each Director in advance of this meeting, the reading in full of that Resolution and the Official Statement in this meeting by the Secretary be dispensed with except for those portions of the Resolution and the Official Statement which have been materially revised and the additions necessary to complete said Resolution and the Official Statement.”

 

It was moved and seconded to dispense with the full reading of RESOLUTION NO. 5738.  The vote was recorded as follows:  McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; and Ulrich - Yes.  The motion carried.

 

Following the preceding vote, Board Chair Ulrich called upon Mr. Jerre Tritsch, a partner with Kutak Rock, the District’s Bond Counsel, for a legal opinion on Resolution No. 5738 and the Preliminary Official Statement.  Mr. Tritsch introduced himself and his colleague, John Petr, who is serving as Counsel for the Underwriters in connection with the Bond transaction.  Mr. Tritsch stated both Resolution No. 5738 and the Preliminary Official Statement were circulated to the Board of Directors during the past week.  Thereafter, he stated his firm has no changes to offer to Resolution No. 5738 and to the Preliminary Official Statement other than the insertion of the proposed terms of the Bonds, including interest rates, maturities and principal amounts.  He added there are also no changes to the final Official Statement, other than the insertion of the terms of the Bonds, and it has been filed with the Secretary.  Mr. Tritsch said the Bonds being considered for approval today, if approved, will close in approximately two weeks.  At that time, his firm will render an opinion on behalf of the District’s Bond Counsel that the bonds are validly issued and the interest on the bonds are exempt from both federal income tax and Nebraska state income tax. 

 

At this time, Mr. Tritsch yielded the floor to Mr. Steve Olson, representing the District’s General Counsel.  Mr. Olson provided a legal opinion on behalf of his firm, Fraser Stryker PC LLO, with respect to the adoption of Resolution No. 5738.  He reported that his firm participated in the drafting of the Preliminary Official Statement for the issuance of Separate System Electric Revenue Bonds (Nebraska City 2), 2008, Series A.  Additionally, he said the form of the proposed Resolution No. 5738 has also been examined by General Counsel and he recommended the OPPD Board of Directors may legally adopt the Series Resolution and the Official Statement and authorize the issuance of the Separate System Bonds in accordance with the terms and conditions of the Series Resolution.  Mr. Olson further stated the original opinion letter will be made a part of the permanent records for this Board meeting. 

 

 

Mrs. Bodammer then read a statement summarizing Resolution No. 5738 as follows:

 

                        “Creates and authorizes issuance of one series of Additional Bonds:  a series of Separate Electric System Revenue Bonds in the principal amount of $21,000,000 to be designated “Separate Electric System Revenue Bonds (Nebraska City 2), 2008, Series A.”

 

Board Chair Ulrich requested and received a motion and second to proceed.   There being no further discussion by the directors or the public, the vote was recorded as follows:  McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; and Ulrich - Yes.  The motion carried.

 

                        The next item of business was consideration of RESOLUTION NO. 5739 which accepts the proposals of Ameritas Investment Corp., as Senior Manager, and the co-managers identified in the Investment Banking Agreement (the “Underwriters”) for the purchase of the Separate Electric System Revenue Bonds (Nebraska City 2), 2008, Series A Bonds (NC2 2008 Series A Bonds) and authorizes the execution of the Bond Purchase Agreement by certain District officials; and approves the Official Statement, the execution thereof by certain District officials and its use in connection with the public offering of the sale of the NC2 2008 Series A Bonds; and grants certain investment authority regarding the investment and reinvestment of proceeds and additional moneys available for investment in the funds established by the Resolution authorizing the issuance and sale of the NC2 2008 Series A Bonds. 

 

                        Director Dodge called upon Mr. Bill Beavers from Ameritas Investment Corp. Mr. Beavers stated his purpose was to offer a proposal to the Board with respect to the NC2 2008 Series A Bonds, and this would be the last construction financing the District will incur for the NC2 project.  He added, however, there may be an eventual need for financial augmentation depending on potential growth and maintenance requirements. Mr. Beavers summarized the Bond issue activities as of October 16, 2008, when the Board authorized the retention of Ameritas Investment Corp. as Senior Managing Underwriter of this financing.  He said they immediately started the intensive work of document preparation required to consummate the loan, take it to its closing, and deliver the proceeds back to the District.  They obtained a preliminary scale utilizing Barclays Capital Inc., Ameritas Investment Corp. and the input from the other five Co-Senior Managers to present to all of the firms and the selling group.  The formal order period opened on November 10, 2008 for the sale of the bonds.  Within the first 1½ hours bond orders for the first 20 years of the loan (2011 through 2028) were getting oversold and orders were redirected for the benefit of the bond issue.  Mr. Beavers affirmed they were in a very strong strategic position by noon that day and it was decided to probe for institutional orders for the 35- and 40-year term bonds (the extreme long end of the bond issue).  He added they thought this action was necessary because of the November 11 holiday when there was no bond market action scheduled.  It was learned later that day there was very little interest in the 35-40 year range and few commitments over 20 years were being made by investors.  Mr. Beavers reported the finance team regrouped and reamortized the loan from 40 years to 30 years which benefited the allocation process for all the previous investors who had already subscribed.  On November 12, an order period was reopened at 8:30 a.m. and by 9:30 a.m. all the Bonds were sold and the entire issue was sold in the retail market without a single institutional order.  Thereafter, Mr. Beavers requested that the Board consider an offer on behalf of all the Underwriters and selling groups that would produce an average interest rate of 5.5772% for the marketed bonds.  

 

Mr. Beavers commented on the economics and dynamics of the NC2 project and the strategic benefits the new plant will provide for OPPD and its customer-owners as the plant produces additional base load.  He extended congratulations to the Board, as well as OPPD’s planning staff and employees who worked on the NC2 project, with respect to their foresight and due diligence that was ordered and delivered in this accomplishment.  He stated the magnitude of this project and the decision-making processes made in 2001-2002 should be understood by OPPD’s 362,000 customer-owners.  Several options for electric generation were considered at that time including the option not to build a new plant and instead purchase power in the open market.  The unanimous decision by the Board at that time was to build NC2 and thereby maintain the power to control OPPD’s destiny, budgets and costs.  Mr. Beavers said that in 2001-02 the original base load request for generation required by the year 2009 was estimated to be approximately 300 megawatts.  However, an engineering study concluded that 600 megawatts would be needed to provide the most economical cost per kilowatt hour for the District.  The project was presented to and approved by the Nebraska Power Review Board in 2002.  The original application was submitted for a 600 MW plant and in 2005 the Nebraska Power Review Board amended the approval to 663 MW.  Over 20 permits were obtained to build NC2.   A total of seven public power districts in the Midwest signed participation power agreements with OPPD for the excess balance of power generated from NC2.  The seven Participants will each pay their proportionate share of the operational and maintenance costs of the plant for 40 years.  They will pay the pro rata debt service for the plant for 40 years.  All Participants understand that OPPD owns and operates the plant and that after 40 years they will have no equity in the plant. Mr. Beavers explained the reason these Participants support the plan, knowing they will have no equity after 40 years, is the incredibly inexpensive power that will benefit them all.  Mr. Beavers reported that NC2 will ultimately cost $1080 per kilowatt hour which translates to a construction cost of approximately $710 million.  Today’s cost estimate for a new identical project would be approximately $2500 per kilowatt hour or nearly 2½ times the construction cost of NC2.  Materials now require considerably longer lead time for key equipment, and to replicate NC2 if starting now would cost in excess of $1½ billion.  He concluded by stating the Nebraska City Station Unit 2 project represents OPPD and its employees at its very best and thanked the Board for allowing his firm to serve OPPD’s interests. 

 

Thereafter, Director Dodge called upon Mr. Chaffin Snider to render his comments on behalf of Barclays Capital Inc., the District’s Financial Advisor.  As Financial Advisor, he and Stephen Peters worked closely with Ameritas Investment Corp. and the District’s financial team on the pricing and structure of the NC2 2008 Series A Bonds.  He commented they looked at several recently priced transactions from comparably rated issuers and the District’s pricing compared very favorably against those issuers.  Additionally they looked at a AAA-rated utility in one of the western states and found that the District’s pricing is in line with that higher rated issue.  He closed by stating Barclays Capital Inc. is very pleased with the marketing efforts of Ameritas Investment Corp. to secure the high level of retail participation and recommended the Board accept the bid of the Underwriters and sell all of the NC2 2008 Series A Bonds to them as proposed.  He presented the Corporate Secretary with a copy of the letter of recommendation to be included in these minutes.

 

Thereafter, Director Dodge called upon the legal opinion of General Counsel, represented by Mr. Steve Olson, with respect to the adoption of Resolution No. 5739.  Mr. Olson stated General Counsel has thoroughly examined the Bond Purchase Agreement of the Underwriters for the Separate Electric System Revenue Bonds (Nebraska City 2), 2008, Series A and the form of Resolution No. 5739 accepting this proposal.  He said it is the opinion of his firm that the Board of Directors may legally adopt Resolution No. 5739 which accepts the Bond Purchase Agreement of the Underwriters for the purchase of the Separate System Bonds.  He presented the Corporate Secretary with a copy of the legal opinion which will be made a permanent record of these proceedings.  Mr. Olson closed by commending the District on an excellent job in bringing this bond issue to conclusion, especially during the current challenging economic climate, and complimented Vice President Moriarty and his staff for all the successful bond issues connected with the Nebraska City Station Unit 2 construction project.   Board Chair Ulrich further congratulated Mr. Moriarty and his team for this effort and other bond issue financings and commented his financial team has added tremendous value to the District’s financial standing moving forward.  Thereafter Director Green also complimented the financial team on establishing OPPD as a highly marketable name for purchases of securities around the country, as well as within our local market area.  There being no further discussion, the vote on Resolution No. 5739 was recorded as follows:  McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; and Ulrich - Yes.  The motion carried.

 

                        RESOLUTION NO. 5740 approves pension adjustments for current retirees, surviving spouses, joint and survivorship and long-term disability recipients, effective January 1, 2009.  Following discussion, the vote was recorded as follows:  McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; and Ulrich - Yes.  The motion carried.

 

 

                        RESOLUTION NO. 5741 approves the appointment of Edward E. Easterlin to the position of Vice President/Chief Financial Officer and Assistant Treasurer/Assistant Secretary, effective as early as November 17, 2008.  Director Weber stated this appointment is necessitated due to the retirement of Vice President Moriarty and summarized Mr. Easterlin’s credentials.  He commented Mr. Easterlin is currently employed by Colorado Springs Utilities as Chief Planning and Financial Officer.  Following discussion, the vote was recorded as follows:  McGuire – Yes; Thompson – Yes; Weber – Yes; Cavanaugh – Yes; Dodge – Yes; Green – Yes; Hall – Yes; and Ulrich - Yes.  The motion carried.

                                   

                        Copies of the foregoing resolutions are filed in the District’s Corporate Records file.        

 

                        There being no further business, the meeting adjourned at 10:45 a.m.

 

 

 

 

C. P. Moriarty                                                             M. C. Bodammer

Assistant Secretary                                                     Corporate Secretary

 

 


 

Board of Directors

bullet Board Mtg Schedule
bullet Board Mtg Minutes
bullet Committee Mtg Material
bullet Rules for Public Participation
bullet Approved Board of Directors Redistricting
bullet Preliminary 2014 Corporate Operating Plan
bullet Sustainablity Update March 20 2014
bullet Energy Assistance Program (EAP)/Common Fund

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