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 ratings reflect the Company’s solid financial profile, supported by predictable earnings from its long-term power purchase agreements (PPAs) and amortization of the Project Bonds within the terms of the PPAs.

The credit quality of BPC continues 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), a wholly owned subsidiary of British Columbia Hydro & Power Authority (BC Hydro; rated AA (high)). 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 credit strength and undertaking in the project.

The PPA rate structure, together with the transfer of hydrology risk, resulted in predictable cash flow and coverage for BPC. Cash flow has been sufficient to cover all expenses, including interest and principal payments and maintenance capital expenditures, with a solid debt service coverage of approximately 1.8 times. Earnings have remained stable at approximately $30 million.

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

This rating is endorsed by DBRS Ratings Limited for use in the European Union.

The applicable methodology is Rating Project Finance (April 2011), which can be found on our website under Methodologies.