PrefBlog

Epcor Power LP issued a press release today with respect to various partnership, operating and regulatory problems:

EPCOR Power L.P. (TSX: EP.UN) (the Partnership) and EPCOR Power Equity Ltd. (TSX: EPP.PR.A) announced today that the Partnership’s current financial expectations for 2009 will be approximately 5 per cent lower than its previous 2009 financial guidance provided in March 2009. The 2009 financial guidance provided in March 2009 was based on the expectation that cash provided by operating activities before working capital changes plus dividends from Primary Energy Recycling Holdings would be approximately $147 million.
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The Partnership also provided an update on the negotiations of new power purchase agreements (PPAs) for the North Carolina facilities, where the current PPAs expire on December 31, 2009. The Partnership and Progress Energy Carolinas, Inc. (Progress) have been in negotiations but, to date, have been unable to finalize new PPAs that are acceptable to both parties. As a result, the Partnership will be applying to the North Carolina Utilities Commission (NCUC) to arbitrate.
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The Partnership noted that in August 2009, Progress applied to the NCUC to replace 397 megawatts of coal-fired generation with 950 megawatts of new gas-fired generation, a net add of over 550 megawatts, with an expected in service date of early 2013. On October 1, 2009 the NCUC issued a notice of decision that requires Progress to submit for NCUC approval, its plans to retire additional coal generation reasonably proportionate to the additional 550 megawatts as a condition to the approval of the new 950 megawatt plant. The Partnership believes that the retirement of additional generation creates a gap in Progress’ resource plan which the cost competitive generation offered by the Partnership’s North Carolina facilities can help fill.

DBRS continued its trend negative assessment in June:

DBRS will continue to monitor the situation while incorporating the positive aspects of the distribution reduction, with a one-notch downgrade of the current debt and preferred ratings possible if Power LP’s financial flexibility diminishes and the prospect of a covenant issue becomes more concrete, and/or there were material reductions in cash flow.

EPP.PR.A was last mentioned on PrefBlog when DBRS assigned the negative trend. EPP.PR.A is tracked by HIMIPref™, but is relegated to the “Scraps” index on credit concerns.

This entry was posted on Wednesday, October 7th, 2009 at 5:59 pm and is filed under Issue Comments. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.