Fitch Rates $52.5MM Berkshire Wind Power Coop Corp, Project Revs, Series 2009 'A'; Outlook Stable.
Proceeds of the bonds will be used to fund the project costs associated with the Coop's purchase of the Berkshire Wind Power Project. The project consists of 10 wind turbine generators, each with a capacity of 1.5 megawatts (MW), in addition to the acquisition of the land where the turbines will be installed, located on the ridgeline of Brodie Mountain in Hancock, MA. In total, the project is expected to have capacity of 15 MW, and it is estimated to produce 52,560 megawatt hours (MWh), assuming a 40% capacity factor. The installation is expected to occur in October and November, and the project is slated to attain commercial operating status in December 2009. The time frame for the installation has been accelerated, due to the availability of the turbines.
The 'A' rating is based on the secured interest in the project; the two take-or-pay contracts, the first between Massachusetts Municipal Wholesale Electric Company (MMWEC) and the Coop, and the second between MMWEC and the 14 project participants; and the growing demand for renewable energy in the region as the Commonwealth is increasing its Renewable Portfolio Standard (RPS) standard. The rating also reflects the 14 members' relatively stable financial positions and favorable service areas, with relatively diversified customer bases.
Under the terms of the Power Sales Contract (PSC) entered into between the Coop and MMWEC, MMWEC will purchase 100% of the capacity and energy output of the project. MMWEC's payment under the PSC is secured by the 14 participants that have entered into the Berkshire Wind Power Purchase Agreements (BWPPA). Under the BWPPA take-or-pay obligations, each of the participants is obligated to pay for their allocated share of the project. Additionally, there is a step-up provision, whereby members are required to pay up to 125% of their committed payment to compensate for the loss of revenues should another member(s) be unable to pay their share. The step-up provision is sufficient to cover several stress scenarios and provides support for the rating.
Massachusetts' current RPS is 4% for 2009, increasing 1% annually through 2020 - to reach a minimum requirement of 15%. After 2020, the minimum standard will continue to increase annually by 1%, unless modified by law.
The 14 participants in this project are participants in MMWEC's other generation projects, and account for approximately 32.1% of MMWEC's overall debt load. Bills sent by MMWEC to participants are combined to include all projects in which the member participates; therefore any payment shortfall would be assigned on a pro-rata basis to all the projects in which the entity participates. (See Fitch's MMWEC report dated February 22, 2008, available on the Fitch web site at www.fitchratings.com.)
The Coop was formed to purchase the Berkshire Wind Project and is composed of 14 municipal light departments and MMWEC. These 14 members include Ashburnham Municipal Light Plant, Boylston Municipal Light Department, Groton Electric Light Department, Holden Municipal Light Department, Hull Municipal Light Plant, Ipswich Municipal Light Department, Marblehead Municipal Light Department, Paxton Municipal Light Department, Peabody Municipal Light Plant, Shrewsbury Electric & Cable Operations, Sterling Municipal Light Department, Templeton Municipal Light and Water Plant, Wakefield Municipal Gas and Light Department, and West Boyleston Municipal Light Plant.
MMWEC is a joint action agency providing wholesale power supply from eight separately secured projects to 28 municipal electric utilities. These 28 participants provide retail service to 35 towns and cities in the Commonwealth, serving an estimated population of 609,000 and an estimated 275,000 customers. Historically, energy was growing at a rate of 1.4%, with a projected growth rate of 1% expected over the next few years. In 2008, MMWEC projects provided approximately 50% of the energy requirements of the project participants.
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|Date:||Jul 24, 2009|
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