Written by The Business Journal Staff
Pacific Ethanol recently announced a number of moves to expand its business, including a new Midwest venture with an existing partner.
Pacific Ethanol, which operates an ethanol plant in Madera, has struck an agreement with the Aurora Cooperative Elevator Co. in Aurora, Nebraska that combines Pacific Ethanol’s two biorefineries in the region with the Aurora Cooperative’s grain elevator and rail infrastructure.
The agreement creates a new company, Pacific Aurora, LLC, of which Pacific Ethanol plans to sell a 14 percent interest to Aurora Cooperative for $30 million in cash. The transaction has Pacific Ethanol owning 74 percent and Aurora Cooperative 26 percent of the combined ethanol production, grain elevator and rail facilities.
The new venture also obtained a new five-year loan in the amount of $30 million to strengthen liquidity.
In addition to the new company, Pacific Ethanol is refinancing some existing debt on its Midwestern assets, resulting in a reduction in total debt outstanding by more than $12 million and reducing annual interest costs by more than $8 million.
Pacific Ethanol also obtained a new five-year term loan of $64 million with a revolving credit line of $32 million, in addition to a $55 million note secured by its ownership interest in its Western assets.
Neil Koehler, Pacific Ethanol’s president and CEO, stated: “In this series of agreements, we will accomplish a major milestone for the company by refinancing the Midwest plants’ term debt at favorable terms, strengthening our balance sheet and significantly lowering our cost of capital. The expanded strategic relationship with the Aurora Cooperative will allow us to directly benefit from farmer ownership in our ethanol business, which has proven to be a winning combination over the years in the ethanol industry. These transactions will be immediately accretive to our shareholders and create new growth opportunities for Pacific Ethanol.”
Pacific Ethanol’s Aurora East plant began operations in 1995 and has an annual capacity of 45 million gallons of ethanol. The Aurora West plant started up in 2012 and has an annual capacity of 110 million gallons of ethanol.
Chris Vincent, Aurora Cooperatives president and CEO, stated: “We are pleased and excited to deepen our relationship with Pacific Ethanol. We will be combining Aurora Cooperative’s grain terminal and handling facility with both of Pacific Ethanol’s adjacent bio-refineries. Our plan is to unify both entities’ operations to gain efficiencies and enhance performance. Aurora Cooperative will use its years of grain origination and operations experience combined with Pacific Ethanol’s production expertise to greatly benefit Pacific Aurora, LLC. Bringing both companies’ resources together benefits our respective stockholders, and adds value and strength to our communities, the State of Nebraska and both the ethanol and grain industries.”
Aurora Cooperative is one of the largest agricultural retailers in the nation, ranking 34th in the nation among all agricultural cooperatives with 80 locations across seven states (Nebraska, Kansas, Colorado, South Dakota, Texas, Iowa, Maryland). In 2016, Aurora cooperative had total sales of nearly $1 billion, serviced over 4.3 million acres, merchandised over 100 million bushels of grain, and worked with more than 14,000 owner customers.
PG&E approaching solar milestone
Pacific Gas and Electric Co. announced the company will soon reach a milestone of 2,409 megawatts of installed private rooftop solar capacity on the energy grid, representing more than 275,000 solar customers in Northern and Central California. PG&E expects to reach this state-mandated limit for its current rooftop solar program this month.
With this milestone, new solar customers that PG&E connects to the energy grid will be on the next version of the net energy-metering (NEM) program, called NEM 2. NEM is the program for private rooftop solar customers who generate their own solar energy and use PG&E energy at night or when the sun’s not shining.
“PG&E is dedicated to supporting our customers’ choice and control when it comes to their energy. Because of our commitment to clean energy, we want to make sure our customers are well informed and prepared as they start on their solar journey. We’re here to help them throughout the process and to safely and quickly connect them to the energy grid,” said Aaron Johnson, vice president of PG&E’s Customer Energy Solutions.
The NEM 2 program for new solar customers makes modest adjustments compared to the existing program, including:
A one-time fee for PG&E to connect a customer’s rooftop solar system to the energy grid, which will be $145 for customers installing a system that is one megawatt or less in size. An average residential customer’s solar system is five kilowatts in size.
A small charge for state-mandated costs contributing to public purpose programs such as low-income or energy efficiency customer programs. New solar customers on the NEM 2 program will pay these charges on electricity they use from PG&E’s grid, but not on electricity they use that’s generated by their solar panels. All other PG&E customers pay these same charges for all of their energy use.
New solar customers will be on a time-of-use rate plan in which the price of electricity depends on the time of the day.
Solar customers who have already installed their solar panels and are on the existing version of NEM will be grandfathered into that program for 20 years from the date their solar system was connected to the grid.