6.1.a-e. ERMUSR 09-13-2016 - Laserfiche WebLink

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Financial Highlights VVDAs - fla ficial strengtn su000rts the Agency's ability to orovice sty e anc CO '1r1 oCtltiVe ratCsr Rate Stabilization Fund Bond Retirement At the end of 2015, MMPA's rate stabilization The Agency used cash to retire$14 million of its fund balance totaled $30.5 million. The rate outstanding bonds in 2015.These bonds had stabilization fund allows MMPA to set stable a 5%coupon and were scheduled to mature in and predictable rates to members based on 2034 and 2035. Extinguishing this debt saves long-term energy price expectations. The goal approximately$700,000 per year in interest of the Agency's rate stabilization fund is to expense for the next 20 years, resulting in lower assist in providing competitive electric prices rates to members. to members. Debt Service Coverage Forward-Looking Energy The MMPA Board of Directors has a policy of Adjustment Clause adopting an annual budget that provides debt Energy prices can be volatile. MMPA's rates to service coverage of at least 1.20 times debt members includes a forward-looking energy service. This target is higher than the 1.15 times adjustment clause (EAC). At the beginning of debt service coverage requirement contained each month, the Agency sets rates to members in the Agency's bond indenture. The policy is based on projected costs for the month. Having intended to provide the Agency with flexibility a forward-looking EAC helps MMPA by matching to withstand unexpected events, while ensuring the timing of revenues and expenses. financial strength. The Agency exceeded its target in 2015 with a debt service coverage ratio of 1.27 times debt service. Year-Ending Rate Debt Service Coverage Ratio Stabilization Balance in thousands of dollars 1.30 — 35,000 — 30,000 — 1.25— 1.27 1.27 $29,300 $30,450 $30,450 124 25,000 — 1.20 — 20,000 — 1.15 — 15,000 — 1.10— 10,000 — a 5,000 — 0 — 1.00 - 2013 2014 2015 2013 2014 2015 22 2015 MMPA Annual Report 134