2017 Annual Report

Our Financial Well-being

MEAG Power is among the nation’s largest joint action agencies* with $9.0 billion in assets and $623.2 million in revenues in 2017. We maintain strong liquidity to fund our operations and capital needs and carefully craft our risk management profile.

Fixed and Variable
Rate Debt

Fixed Rate Debt

Variable Rate Debt Synthetically Converted to Fixed

Variable Rate Debt

Part of our risk management activity since 2006 has been to reduce the amount of variable rate debt on our balance sheet. It is now about 12%, of which 3% is converted to fixed rate via interest rate swap transactions.

MEAG Power has maintained strong credit ratings for many years based on our solid, conservative balance sheet and experienced management; the Municipal Competitive Trust, which as of December 2017 was valued at $590 million; and the revenue pledge and take-or-pay general obligation pledge of our power sales contracts with our Participants. In January 2018, Moody’s Investors Service revised the outlook from negative to stable on our Project M and Project P Vogtle revenue bonds. In April 2018, Fitch Ratings removed the Rating Watch Negative designation from Project One, the General Resolution Projects, the Combined Cycle Project, Project M, and Project J bonds, and assigned a stable outlook. Fitch Ratings also removed the Rating Watch Negative designation from Project P bonds while assigning a negative outlook.

Annual Weighted Average Interest Cost
(in percent)

The weighted average interest rate of MEAG Power’s debt for 2017 increased slightly to 4.11%, due primarily to higher interest rates on unhedged variable-rate borrowings, partially offset by a decrease in the weighted average rate of fixed-rate debt.

Total Debt Outstanding
(in billions of dollars)

During 2017, total debt outstanding decreased $365 million due to scheduled principal payments and payoff of other debt prior to maturity.

As we look to the future, several events are noteworthy. In 2017, the Department of Energy committed a conditional guarantee to MEAG Power for up to $415 million. We also received $835 million from Toshiba as part of their parent guarantee obligation. And in early 2018, Congress passed, and the President signed, legislation that will allow us to monetize hundreds of millions of dollars in Nuclear Production Tax Credits. Moreover, our debt service on our coal nuclear facilities is declining, offsetting upward cost pressure in other areas.

We will continue to stay alert to fiscal opportunities and communicate regularly with our Participants, investors and the credit rating agencies. The positive character of our finances has energized our outlook, as we strive to produce continued success in this area.

* Source: Large Public Power Council