DBRS Confirms Brilliant Power Corporation at A (high)

DBRS has today confirmed the ratings of Brilliant Power Corporation’s (BPC or the Company) Series A, B and C Project Bonds (collectively, the Project Bonds) at A (high), all with Stable trends. The confirmation reflects the Company’s solid financial profile supported by predictable earnings from its long-term power purchase agreements (PPAs) and low-cost hydroelectric generating assets (the Project). The Project Bonds are scheduled to fully amortize within the term of the PPAs.

The ratings on BPC’s Project Bonds continue to be supported by its long-term, take-or-pay PPA with FortisBC Inc. (FortisBC, rated A (low)), and a backstop sales agreement with British Columbia Power Exchange Corporation (Powerex, not rated by DBRS), a wholly-owned subsidiary of British Columbia Hydro & Power Authority (BC Hydro, rated AA (high), see separate report dated June 6, 2011). Under a Canal Plant Agreement with BC Hydro, the Project swapped its hydroelectric production to a predetermined energy and capacity “entitlement” from BC Hydro, eliminating the Project’s hydrology risk. The entitlement energy, in turn, is mostly off-taken by FortisBC under the PPA backstopped by the BC Hydro-owned Powerex. BPC’s bond ratings, therefore, reflect BC Hydro’s undertaking in the project and credit strength.

The PPA rate structure, together with transfer of hydrology risk, resulted in strong cash flow and coverage that generally trended up with the escalation of the PPA rates. Cash flow has been sufficient to cover all expenses, including interest and principal payments and maintenance capital expenditures, and allow for cash distribution to the shareholders.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Project Finance, which can be found on our website under Methodologies.