About
Patriots Energy Group

For its day-to-day operations, PEG has a contract with the Municipal Gas Authority of Georgia (the Gas Authority); a large joint-action agency created in 1987 that provides gas supply and capacity planning services and acts as PEG’s agent with certain third-party vendors. PEG also contracts with one of its members, YCNGA, for day-to-day operations and maintenance of PEG’s pipeline facilities.

PEG obtains a significant portion of its gas supplies on a long-term basis and obtains the remainder from various suppliers on a short-term basis. Under each of the long-term transactions, the gas is priced at a discount to spot market pricing with potential additional discounts distributed annually.

Patriots Energy Group (PEG) has participated in many financed natural gas transactions as a customer since 2006, providing PEG and its members with significant discounted natural gas supplies.

• Tennessee Energy Acquisition Corporation (TEAC) in 2006, 2007 and 2018
• Main Street Natural Gas, Inc (Main St) in 2007
• Blackbelt Energy (Blackbelt) in 2018
• Public Energy Authority of Kentucky (PEAK) in 2018
• Public Gas Partners Pool #4 (PGP Pool #4) in 2018
• Patriots Energy Group Financing Agency (PEGFA) in August 2018

In August 2018, Patriots Energy Group Financing Agency (PEGFA) issued 30-year Gas Revenue Bonds totaling $832,350,000. These proceeds have been used to prepay PEGFA’s first long-term gas supply agreement with the Royal Bank of Canada.

Over a 30-year period, the members of PEGFA will obtain some 216,865,600 MMBtus of natural gas supplies at a discount to the market price that is created by this structured transaction. The rest of the gas acquired will be sold to the Municipal Gas Authority of Georgia for resell to their members at a discount.

If the transaction goes to the full 30-year term, PEGFA members will save approximately $90,216,090. That represents a per unit savings of 10-15% of the cost of natural gas. The gas supply will make up approximately 50.85% of the gas required for the three Authorities until 2048, based on the last 12 months of usage.

The bonds are structured to be put back into the market “
in 2024, which will create a different unit discount. But Authorities are big winners even if their discount is less. Even if we obtain only the minimum discount provided for under our transaction, PEGFA will still see savings after 2023 of $95,953,228.

The Gas Revenue Bonds are not general obligations of the state, PEGFA, or its members, but are secured solely by a lien on the Trust Estate that is funded by the revenues from the sale of gas purchased with the bond proceeds. On August 2, 2018, Moody’s Investors Service has assigned an Aa2 rating to the Gas Supply Revenue Bonds.

PEG has entered into three natural gas production-sharing agreements (PSAs) with Public Gas Partners, Inc. (PGP), a Georgia nonprofit corporation originally composed of seven municipal gas and electric systems and joint action agencies that acquire and manage pools of long-term natural gas supplies on behalf of its members. Each PSA obligates PEG to pay, as a component of gas operations expense, its share of all costs incurred by the related PGP pool (Pool 1, Pool 2, or Pool 3) until all related PGP or participant debt has been paid and the last volumes have been delivered. In addition, each pool has the option, with at least six months’ notice, to require PEG to prepay for its share of pool costs, which may be financed by PEG through the issuance of bonds or some other form of long-term financing. PEG has decided to participate in joint financing by PGP on behalf of certain of its members. PEG’s share of acquisitions is 8.29%, 10.00%, and 2.66% in Pools 1, 2 and 3, respectively. The PSAs include a step-up provision that could obligate PEG to increase its participation share in the pool by up to 25% in the event of default of another member. PEG expects to receive physical gas supplies from PGP through at least 2027 for volumes and prices established by PGP.

In June 2006, at the time of the original financing issue, PEG entered into a 30-year financing agreement with its Members to secure the financial covenants and assurances necessary to secure PEG’s indebtedness. Under the financing agreement, Members are obligated to pay all costs billed by PEG for its services. PEG pledged its revenues as security for payment of the bonds.

In December 2008, PEG refunded the original Series 2006A bonds with Series 2008 variable-rate demand bonds for $32,455,000. Consistent with the prior series, the Series 2008 bond proceeds were used to finance the costs of acquiring, constructing and installing extensions and improvements to PEG’s original gas pipeline facilities.

The Series 2008 Bonds are held by TD Bank, N.A. (“TB Bank”). The Series 2008 Bonds bear interest at a variable rate based on LIBOR plus a margin and have a stated maturity of June 1, 2036. In connection with the purchase of the Series 2008 Bonds by TD Bank upon the remarketing of the Series 2008 Bones in December 2014, PEG entered into a Credit Agreement with TD Bank which contains certain covenants and agreements of PEG for the benefit of TD Bank. Pursuant to the Credit Agreement, on December 1 2021, TD Bank will have the option to cause PEG to purchase the outstanding Series 2008 Bonds at a purchase price equal to the principal amount thereof plus interest accrued to the purchase date.

In December 2019, Series 2019 Bonds were issued by PEG for the purpose of providing funds to refund the Series 2010B (Taxable Recovery Zone Economic Development Bonds), request an addition $5,000,000, to construct additional infrastructure, satisfy the 2019 Reserve Requirement by funding the Series 2019 debt Service Reserve Fund through the purchase of a surety bone and pay the cost of issuance of the Series 2019 Bond.

PEG was in compliance with the debt covenants associated with Series 2019 and 2008 bonds.

Patriots Energy Group, a South Carolina joint action agency, supplying energy solutions to the natural gas authorities of York, Chester and Lancaster counties, delivers the safest, most reliable and economic service to its members and future partners.

As a joint action agency in upstate SC, we are about our past, our present and our future. We have a history of competitive rates, safety and reliability. Based on our ability to implement our strategic plans, we are focused, efficient and effective in providing premium services. Given that our planning provides our road map for success, and that we act in a collaborative nature, we continue to foster economic growth in upstate SC. Based on our well-known identity we are able to attract companies and industries to our service area. As a continued leader in cutting edge technology, infrastructure and facilities, we are able to offer mutual services among our members. We are preparing for tomorrow’s future, by learning from our past and our continued success means savings for you our members and customers.

Through a collaborative vision, we are reliable, safe and responsible.