| (I) Whether the facility can achieve the applicant's
EAF and capacity projections over the life of the loan agreement;
and
(J) The basis for the total projected construction
costs, including project contingencies.
(3) The TEF administrator will conduct due diligence
on each application to gauge the feasibility of the project. Each
applicant must submit an independent engineer's report, signed and
sealed by a professional engineer licensed in the state of Texas,
at the applicant's own expense, that assesses the feasibility of the
project, its location, and all supporting commercial agreements relating
to fuel, water, site control, and interconnection. The TEF administrator
may request that an applicant provide additional information it determines
necessary to conduct a complete evaluation of the project proposal.
(g) Loan Structure. An approved loan will have the
following characteristics:
(1) Consist of no more than 60 percent of the estimated
cost of the electric generating facility to be completed, or in the
case of an electric generating facility that serves an industrial
load or PUN, consist of no more than 60 percent of a percentage of
total estimated facility costs equal to the percentage of the total
capacity of the facility that is dedicated to ERCOT;
(2) Be the senior debt secured by:
(A) the electric generating facility to be completed;
or
(B) with regard to an MOU or river authority, the revenues
of the applicant's utility system into which the electric generating
facility will be incorporated and made a part of;
(3) Have a term of 20 years;
(4) Be payable starting on the third anniversary of
the estimated commercial operations date of the electric generating
facility as stated in the application;
(5) Be payable ratably on terms on which the TEF administrator
and the applicant have agreed, based on the applicant's expectation
of cash flows from the project and the TEF administrator's assessment
of the applicant's cash flows; and
(6) With respect to a borrower other than an MOU or
river authority, be structured as senior debt secured by a first lien
security interest in the assets and revenues of the project.
(7) Notwithstanding paragraph (1) through (6) of this
subsection, a loan accepted by a borrower that is an MOU or river
authority may be in the form of a public security, as defined in Chapter
1201, Government Code, issued under Texas laws governing MOU or river
authority financing, provided that the MOU or river authority, at
its own expense, presents documentation of indebtedness satisfactory
to the commission.
(h) Loan Terms and Agreements. A borrower must enter
into one or more agreements with the commission that include the terms
of this section.
(1) Credit agreement--the primary agreement between
the borrower and the commission that will govern the terms and conditions
under which the commission will loan funds to the borrower. The credit
agreement will include the following key terms:
(A) Performance covenant--each generation resource
in an electric generating facility that is financed by a loan under
this section must maintain a PAF of at least 85 percent and a POF
no greater than 15 percent, evaluated monthly, over the trailing 12-month
period, throughout the term of the loan.
(B) Loan facility--a senior secured first lien loan
facility will be advanced to the borrower in one or more drawdowns
after the closing date of the credit agreement and upon satisfaction
of any conditions precedent, and may continue until the project achieves
commercial operation. Amortization schedules for the loan facilities
will be determined during due diligence and specified in the credit
agreement.
(i) Upon initial closing of the credit agreement and
after the borrower has met the conditions precedent outlined in the
loan agreement, the borrower may request an initial loan disbursement
for up to 60 percent of qualifying and documented incurred expenses
that are part of the total estimated cost of construction for the
project, as verified by the TEF administrator. Equity may be funded
pro rata with TEF debt or may be required in its entirety prior to
funding of TEF debt, based on the credit quality of the application
and discretion of the commission and as outlined in the loan agreement.
(ii) During the period of construction, the borrower
may request loan disbursements for up to 60 percent of the documented
project construction and commissioning costs.
(iii) For all loan disbursements, the borrower must
submit a construction drawdown certificate in the form specified by
the commission. The TEF administrator will review the construction
drawdown certificate and, upon the TEF administrator’s approval,
will instruct the Texas Treasury Safekeeping Trust Company to disburse
funds.
(C) Other capital contributions. The TEF administrator
will verify the borrower’s ability, or the ability of the borrower’s
corporate sponsor, to fund the required commitment of the balance
of no less than 40 percent of the construction and commissioning costs.
(D) Interest on the loan amounts disbursed under the
credit agreement will accrue daily at a fixed annual rate of three
percent, starting at initial disbursement and continuing throughout
the term of the loan.
(E) Voluntary prepayment--the borrower may voluntarily
prepay the loan amount under the credit agreement in whole or in part
at any time without premium or penalty, except that the loan agreement
may require that borrowers pay any breakage costs associated with
the loan, and the borrower must agree to adhere to the terms of the
performance covenant for the duration of the 20-year term.
(F) Collateral--to secure the indebtedness under the
credit agreement, the borrower, other than an MOU or river authority,
will grant the commission a first priority security interest in all
of its existing and after-acquired real and personal property related
to the facility and in all of the outstanding equity interests of
the borrower in the facility.
(G) Registration--prior to the initial loan disbursement,
the borrower must register with the commission as a power generation
company, unless the borrower is an MOU, electric cooperative, or river
authority. The borrower must also agree to register each generation
resource in the electric generating facility with ERCOT, according
to ERCOT’s registration requirements in its protocols for generation
resources.
(H) A change of ownership and control occurs if greater
than 50 percent of the equity interest in the project is sold to a
third party. The borrower and the third party must submit an application
for change of ownership and control commission, that meets the eligibility
requirements of subsections (c) and (e) of this section. The acquiring
third party must agree to adhere to the terms of the performance covenant
in paragraph (1)(A) of this subsection and compliance and audit covenant
in paragraph (1)(I) of this subsection for the remainder of the 20-year
term of the borrower’s loan. A change of ownership and control
will require the commission's approval, and such approval will not
be unreasonably withheld. Upon approval of a change of ownership and
control, the acquiring third party must update the power generation
company registration and the generation resource registration to reflect
the change of ownership and control. The commission's determination
on a change of ownership does not impact any person's obligations
under PURA §39.158.
(I) Compliance and audit covenants--the credit agreement
will include debt covenants requiring the borrower to meet all statutory
requirements for loan application eligibility and a debt covenant
requiring that the borrower submit annual financial audits and credit
assessments throughout the term of the loan. If the borrower's electric
generating facility serves an industrial load or PUN, the borrower
must also submit an annual accounting, at the generation resource
level, showing the capacity made available exclusively to the ERCOT
bulk power system during the performance year. The annual accounting
must consist of a comparison between the sum of the nameplate capacity
of each generation resource in the electric generating facility and
the maximum non-coincident peak demand of the associated industrial
load or PUN. Annual financial audits, credit assessments, and electric
generating facility performance assessments submitted under this section
are confidential and not subject to disclosure under Chapter 552,
Government Code.
(2) Depositary agreement--an agreement between the
borrower and commission that will give the commission, as lender,
control over the borrower's deposit accounts and securities accounts
to perfect the commission's security interest in those accounts.
Cont'd... |
