FPL Energy Caithness Prelim BBB- Bnd Rtg Afmd by S&P.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/30/98-- Standard & Poor's today affirmed its triple-'B'-minus preliminary rating on FPL Energy Caithness Funding Corp.'s $150 million senior secured bonds due 2018. The outlook is stable.

On June 17, 1998 an outage occurred at solar energy generating station (SEGS) IX located in the Mojave Desert, Calif. The facility is owned by Luz Solar Partners IX and operated by ESI Operating, a subsidiary of FPL Energy. SEGS IX turbine-generator unit was taken offline in order to address high generator rotor vibration that limited the power output. The vibration in the generator, which is part of the ASEA Brown Boveri (ABB) turbine-generator unit, is thought to have been caused by shorted turns in the rotor coils. While some generators have been operated for long periods of time with benign shorted turns, generators must be taken out of operation when the shorts begin to limit power output, or result in high vibration levels. The rotor was removed and prepared for shipment to the General Electric facility in Anaheim, Calif., for repairs. A spare rotor was delivered to the site from an ABB facility in Richmond, Va. on June 22, 1998 and was installed in the SEGS IX generator June 23, after required testing. The unit was put back into operation on Friday, June 26, and has surpassed its on-peak requirement of 80 MW. FPL Energy expects the financial impact of the incident to be limited to $700,000 in lost revenues and $250,000 in an insurance deductible. The outage is not expected to adversely affect the facility's future financial performance.

Sargent & Lundy, the independent engineer, has expressed to Standard & Poor's that the plant personnel's handling of the incident was timely and effective. ABB and ESI responded quickly by providing qualified specialists for testing and repairs.

In regard to SEGS VIII, tests of the generator showed the existence of a few shorted turns which appeared to be benign as far as their effect on the operation of the generator. Based on the results of the tests, SEGS VIII generator should be able to operate reliably on an ongoing basis.

FPL Energy Caithness Funding Corp., a holding company for SEGS VIII and SEGS IX, is in the process of issuing $150 million in senior secured bonds.

OUTLOOK: STABLE FPL Energy Caithness's outlook is based on California's continued regulatory support of renewable power and the project's sound operations that should result in predictable income streams and stable projected debt service coverage, Standard & Poor's said. -- CreditWire

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