Debt

Investor-owned utilities and other publicly traded companies typically finance their capital needs with a combination of debt and equity. Municipal utilities and co-ops do not have equity and must depend on debt for most of their capital needs. Given the high capital requirements of operating a utility, access to debt is critical. Utility debt comes from a variety of sources:

• Bank loans – lines of credit and term loans

• Commercial paper – short-term unsecured loans

• Convertible bonds – bonds that can be converted into stock

• Mortgage bonds – bonds secured by a mortgage on property or stock

• Long-term bonds – bonds with maturities typically between five and 20 years

• Project financing – debt paid back by revenues associated with a specific asset

Here is an example of debt from CenterPoint Energy 2018 Annual 10K (click on table to enlarge):