Strength in Numbers: 2018 MEAG Annual Conference

July 23, 2018

I recently had the pleasure of attending the Municipal Electric Authority of Georgia (MEAG) Annual Conference. If you’re not that familiar with MEAG, there’s a ton of great info on their website.

“The Municipal Electric Authority of Georgia (MEAG Power) is a nonprofit, statewide generation and transmission organization that is recognized as one of the premier joint action agencies in the country, with a diversified fuel portfolio and more than half of the energy mix coming from emissions-free generation resources. MEAG Power has over $9 billion in assets, delivered 10.6 million megawatt-hours of energy in 2014, and owns more than 1,300 miles of high-voltage transmission lines and nearly 200 substations. MEAG Power is also a co-owner of the new nuclear under construction at Plant Vogtle Units 3&4. Completion expected in late 2020 and 2021. MEAG Power provides reliable, competitive wholesale electricity to its 49 member communities, who own their local distribution systems.”

This description doesn’t even begin to capture the true dynamic nature of this organization. For the record, MEAG was one of the names I covered when I was a buy-side research analyst. The management and staff, led by CEO Jim Fuller and CFO Edward Easterlin, are always focused on the varied needs of their 49 participants and their investor base. As you might imagine, such a diverse group of participants makes for a challenging environment even when all of participants agree.

A truly interesting aspect of MEAG as an issuer is that the credit strength of MEAG’s various projects is based on the credit strength of each of the participating participants. Each participant is required to step-up their share of each project they are involved with if another participant fails to make a payment. MEAG also has the ability to force it members to raise rates to cover all expenses and their portion of debt service. Additionally, MEAG’s power sales contracts with their participants are court validated, which makes it impossible for participants to challenge the power sales contracts.

And in my opinion, MEAG does a brilliant job of informing all of their participants about the numerous challenges facing the industry and the organization. Especially with the construction at Vogtle, a two-unit nuclear power plant in Burke County. MEAG chose to join Georgia Power and Oglethorpe in the construction of two nuclear units at their existing Vogtle facility. They went into this project with eyes wide open and understood all the risks from the onset. Good management teams understand this. Given that things have not gone as originally planned with the construction of Vogtle Units 3 and 4, it is comforting to know there is an experienced team at the helm.

Every year I enjoy speaking with many of the members, mayors and board members that comprise MEAG. Despite the members being from different regions of the state and many different socioeconomic environments, they all understand that being part of MEAG is a positive for their communities. It is very important for MEAG’s management to make sure all of their members are informed and up to date on everything happening locally and also nationally. Just as important, they are also very aware that their investors need updates as well.    

Buy-Side Investor

BondLink Perspective - Former Muni Buy-Side Investor