The Public Utility Commission of Texas is moving ahead with its search for an advisor for CenterPoint Energy's pending $1.8 billion stranded electricity cost bond offering, in spite of the fact that the financing order for the deal is under appeal. Early this month, the Commission posted a RFP seeking an advisor for the deal just days after the Texas Attorney General's Office filed to appeal the Commission's financing order giving Houston-based CenterPoint the green light to line up its advisor.
The bidding period for the deal ends April 15. Terry Hadley, spokesman for the Commission, declined to comment on whether any bids had been received, and said no information would be revealed until an adviser had been selected.
The RFP requires the advisor to make a number of certifications as to the structure and pricing of the deal and even requires that the advisor's CEO certify the document. Specifically, the document requires that the advisor "have a decision-making role co-equal to the utility with respect to structuring, marketing and pricing of the transition bonds, including the selection of the underwriting syndicate."
The RFP also says that the advisor must provide written certification from the book-running underwriter that the structuring, marketing and pricing of the bonds resulted in the lowest cost of funds and transition bond charges consistent with market conditions and the terms of the financing order. At least two banks have reportedly balked at signing the certification because they were uncomfortable with its terms, thereby taking themselves out of the running to advise the deal.
In August, the Commission awarded CenterPoint the right to collect $2.3 billion in "true-up" costs related to the transition to deregulation of the power industry in the state of Texas. The attorney general's office appealed that decision on the grounds the amount was too much, and CenterPoint appealed the decision on the grounds it is too low. Both appeals are still pending. The attorney general lodged this month's appeal based on the fact that the original case is not yet resolved, and the appeal could delay the offering indefinitely (see ASR 4/4/05).
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