Fitch Revises Rating Watch on Cedar Brakes I & II to Positive.

NEW YORK -- Fitch Ratings has revised the Rating Watch Status on the following bonds for Cedar Brakes I LLC and Cedar Brakes II LLC to Positive from Negative.

Cedar Brakes I LLC

-- $285.8 million senior secured bonds 'B'.

Cedar Brakes II LLC

-- $379.7 million senior secured bonds 'B'.

The rating action follows yesterday's announcement that El Paso Marketing (EPM), an affiliate of El Paso Corp. (EP), has reached an agreement to transfer its power supply obligations under Cedar Brakes to Constellation Energy Commodities Group, Inc. (CECG), an affiliate of 'A-' rated Constellation Energy Group.

The Cedar Brakes entities were originally created as part of El Paso Corp.'s (EP) Qualifying Facility contract restructuring program. Cedar Brakes I and II currently purchase energy from El Paso Marketing (EPM) and resell that energy to Public Service Electric & Gas Co. (senior unsecured rated 'A-' by Fitch) under long term contracts. Although Cedar Brakes I and II are bankruptcy-remote, indirect subsidiaries of EP, their ratings have been constrained by the underlying credit quality of EP due to EP's guarantee of EPM's performance under the supply contracts. Upon closing of the transfer of EPM's supply obligations to CEGG, Fitch expects to raise its ratings to reflect the higher credit quality of the CEG group versus that of EP.