Prepaid Energy

  • Overview
  • Attorneys

Kutak Rock has been deeply involved in the development and implementation of the prepaid energy financing technique since its first use in the early 1990s. Our attorneys developed many of the theories still in use allowing tax-exempt funding of prepaid energy contracts. Kutak Rock has acted as bond or special tax counsel on more natural gas prepayment municipal bond issues than any other law firm with the principal amount of such bonds aggregating more than $5 billion, and also regularly acts in the role of supplier counsel, municipal participant counsel and underwriter's counsel. In these roles our attorneys have participated in virtually every type of gas prepayment structure that has been used to date, including fixed rate, variable rate demand (Kutak Rock was bond counsel on the first such financing), tax-exempt, taxable, privately placed and publicly offered. We also have guided issuers through early termination of these highly structured transactions, giving us first-hand experience with the intricacies of prepayment transactions that few law firms can match. Although few representative transactions have been closed, Kutak Rock’s attorneys continue to work on the development of a viable electric prepayment model, which may include the use of wind generation or natural gas as a source of supply.

Although the economic downturn has significantly reduced the use of natural gas prepayment financing during recent years, Kutak Rock and its municipal clients remain committed to seeking out and acquiring the most economical and secure sources of natural gas for their customers. Our efforts to develop workable alternative financing structures and locate sources of supply have in fact increased during this period, and we remain convinced that municipal utilities can achieve significant benefits through the use of this financing technique now and in the future. Kutak Rock’s passion and legal expertise in this area, gained through unmatched experience, is dedicated to assisting its clients achieve such benefits.