Plant Acquisition

9 Months Ended

Sep. 30, 2021

Plant Acquisition. On July 8, 2021, we acquired Effingham County Power, LLC, which owned the Effingham Energy Facility located near Savannah, Georgia, from Effingham County Power Holdings, LLC, an affiliate of the Carlyle Group, Inc. Effingham consists of a natural gas-fired combined cycle unit with an aggregate summer planning reserve generation capacity of approximately 511 megawatts. Subsequently, we dissolved Effingham County Power, LLC and transferred all of its assets and liabilities to Oglethorpe.

The purchase price was $233,156,000 and the acquisition also included other transaction costs of approximately $1,382,000 (consisting primarily of legal and professional services). We accounted for the acquisition as an asset acquisition. We financed the acquisition on an interim basis through the issuance of commercial paper. We submitted a loan application and have received a conditional loan commitment from the Rural Utilities Service for long-term financing of this acquisition. For any amounts not funded through the Rural Utilities Service, we intend to issue first mortgage bonds. We expect that any financing from the Rural Utilities Service or through first mortgage bonds will be secured under our first mortgage indenture.

The following amounts represent the identifiable assets acquired and liabilities assumed in the Effingham acquisition:


Classification
	(dollars in thousands)
Recognized identifiable assets acquired and liabilities assumed:
Electric plant in service, net	$	229,215
Inventories, at average cost	3,264
Other current assets	3,167
Other current liabilities	(2,490)
Total identifiable net assets	$	233,156

Some of our members elected to take service (scheduling members) at the date of acquisition and some members have elected to defer (deferring members) their share of output until on or before January 2026. Prior to the deferring members’ use of Effingham, their share of output is being sold into the wholesale market. Revenues and costs of output taken by scheduling members are being recognized in the current period. Residual net results of operations from Effingham, including related interest costs, are being deferred as a regulatory asset. This regulatory asset will be amortized over the then remaining life of the plant, estimated to be 22 years at January 2026. If a deferring member elects to take service before January 2026, amortization of the regulatory asset will begin upon taking service.