S&P Reassesses QF Rates As Utilities Get Stronger

Standard & Poor?s revisited the ratings and outlooks for eight large qualifying facilities April 8 in light of Southern California Edison?s recent credit upgrade and Pacific Gas & Electric?s plan to emerge from bankruptcy April 12. S&P awarded four QFs with BBB to BBB- ratings, two with BB , and two with B+ . In general, the ratings agency said the outlook for the plants is stable, despite volatile gas prices. S&P notes that the gas price problem pushed the QFs to reach settlements with utilities that lock in pricing, but that those settlements expire in two to three years. Three Sacramento Municipal Utility District cogeneration plants, those of the Central Valley Financing Authority with a capacity of 100 MW, the Sacramento Cogeneration Authority with 120 MW, and the Sacramento Power Authority with 190 MW, are rated highest. Their deals with the muni ?most resemble straight tolling agreements,? insulating them from the market and fuel risk, according to S&P. FPL Energy?s Caithness Funding Corp., with two solar projects with a total capacity of 240 MW, is also rated highly because of fixed capacity payments from Edison. Caithness Coso Funding is responsible for three geothermal plants with a combined 80 MW of capacity and earned a BB+ rating for 5.37 cents/kWh to May 2007 from Edison. Salton Sea Funding Corp., with its 327 MW geothermal, also contracted to Edison, earned a BB+ for 5.37 cents/kWh until May 2007. The rating is slightly lower than Coso?s because there is exposure to uncontracted capacity. Juniper Generation, with 320 MW of cogeneration, sells to both Edison and PG&E. It rated B+ . That is due to PG&E?s bankruptcy status. PG&E?s status also affected North American Power?s B- rating for its 39 MW coal/coke generation.

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S&P Reassesses QF Rates As Utilities Get Stronger

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