City of Kaukauna Outagamie County, Wisconsin

City of Kaukauna
Outagamie County, Wisconsin
$18,225,000 Electric System Revenue Bonds, Series 2012A
$1,300,000 Taxable Electric System Revenue Bonds, Series 2012B
$25,350,000 Taxable Electric System Revenue Bonds, Series 2012C
(New Clean Renewable Energy Bonds – Direct Payment)
Underlying Rating: AA-/A
Insured by Assured Guaranty Municipal
Sale Date: 01/17/2012
Role of HSE: Sole Manager

On January 17, 2012 Hutchinson, Shockey, Erley & Co. acted as sole manager on a $44.875 million transaction for the City of Kaukauna, Wisconsin. Kaukauna is situated on the Fox River, approximately 25 miles southwest of Green Bay and 105 miles north of Milwaukee, in Outagamie County.

The Bonds were issued for the purpose of paying the cost of various system projects, including the construction of a substation, distribution lines and other facilities improvements, a portion of the cost of the Hydroelectric Project and partially funding the Reserve Account.

The Kaukauna Electric Utility:
Kaukauna Utilities (the “Utility”) is a combined electric and water utility for operational purposes. The Utility operates 8 hydroelectric sites on and near the Fox River in Outagamie County, which provide approximately 20% of its total needs. Two of the hydro plants are subject to contract with WPPI Energy. The Utility also owns a 20MW of gas turbine generation, which is also subject to contract with WPPI.
The Electric System is owned and operated by the City of Kaukauna and provides service to approximately 14,501 customers in Kaukauna, Little Chute, a section of Combined Locks and seven townships in the rural service area.

The Hydroelectric Project:
Kaukauna Utilities has historically operated a hydroelectric plant on the Fox River consisting of Old Badger (constructed in 1908) and New Badger (completed in 1928). Old Badger contains two 1,000 kW generators, each connected to a horizontal shaft turbine. New Badger housed two 1,800 kW generators, each connected to vertical shaft turbines. The total generating capacity is 5.6MW.

The proposed hydroelectric project is to decommission the Old Badger powerhouse, demolish the New Badger powerhouse and construct a new powerhouse approximately 150 feet upstream from the existing New Badger powerhouse site. In addition, the proposed project would modify the power canal and install two new identical 3.6MW horizontal Kaplan “S” type turbines. The estimated cost for all related hydroelectric improvements is $37.0 million. On May 18, 2011, the Federal Energy Regulatory Commission (FERC) issued a license to the Utility for a term of 50-years.

The Bonds:
The 2012A Bonds (par amount: $18,225,000), were issued as a term bond maturing on December 15, 2035. Interest payments commenced on December 15, 2012 and are paid on each June 15 and December 15 thereafter. The Bonds are subject to redemption on December 15, 2022. The Bonds were issued for the purpose of paying the costs of System Projects, a portion of the costs of the Hydroelectric Project and costs of issuance of the 2012A Bonds and 2012C Bonds, and are partially funding the Reserve Account.

The 2012B Bonds are taxable with a par amount of $1,300,000. Principal is due December 15, 2012 through 2022. Interest payments commenced on December 15, 2012 and are paid on each June 15 and December 15 thereafter. They were structured as non-callable. The Bonds were issued for the purpose of partially funding the Reserve Account and paying a portion of the costs of issuance.

The 2012C Bonds are taxable with a total par amount of $25,350,000. The bonds were structured as a term bond maturing on December 15, 2030. Interest payments commenced on December 15, 2012 and are paid each June 15 and December 15 thereafter. This series is not subject to optional redemption prior to maturity except in the event of an Extraordinary Event. The Bonds were issued for the purpose of paying a portion of the cost of the Hydroelectric Project and a portion of the costs of issuance. The 2012C Bonds were designated as “New Clean Renewable Energy Bonds – Direct Payment.”