DBRS Confirms Ratings of Comber Wind Financial Corporation at BBB, Stable

DBRS has today confirmed its rating of BBB with a Stable trend on the Series 1 Senior Secured Bonds (the Bonds), due November 15, 2030, of Comber Wind Financial Corporation (the Issuer). The Issuer is the financing vehicle of Comber Wind Limited Partnership (ProjectCo), a special-purpose entity that owns the 82.8-megawatt (MW) Comber East and the adjacent 82.8-MW Comber West wind projects (together, the Project) located in Essex County, Ontario, Canada.

The Project commenced commercial operations in November 2011, utilizing 72 SWT-2.3-101 model wind turbine generators supplied by Siemens Canada Limited. ProjectCo benefits from fully contracted power prices at attractive rates under two Feed-In-Tariff (FIT) contracts with the Ontario Power Authority (OPA; rated A (high) with a Stable trend by DBRS). For 20 years until November 2031, the OPA pays to ProjectCo the difference between a fixed but partially indexed price, currently $141.10 per megawatt hour (MWh), and the market price received in Ontario.

In September 2013, ProjectCo came to an agreement with the OPA regarding compensating payments if the Project¡¯s energy production is curtailed by the Independent Electricity System Operator (IESO) in excess of pre-determined thresholds. In December 2013, $3.1 million of the Bonds were repaid from the Curtailment Reserve to maintain a pro forma debt service coverage ratio (DSCR) projection of 1.40 times (x).

The Project is operated by Brookfield Power Services Inc. (BPSI), an affiliate of the Project¡¯s ultimate owners. The Bonds are secured by a first priority, perfected security interest in the property, and rights of the Issuer and ProjectCo and are guaranteed by ProjectCo and its two partnership unit owners.

The long-term average annual power production forecast (or P50 case) is 501 gigawatt hours (GWh), while annual P90 power production forecast is 438 GWh. The actual energy generated in 2012 was at the equivalent P71 level (473.4 GWh), and somewhat higher in 2013 around the P57 level (492.7 GWh). DBRS does not consider two years of production data supportive of statistically significant conclusions regarding the ultimate long-term wind resource available. Inferring from the best currently available data, DBRS estimates that operations and maintenance (O&M) costs are likely to be slightly higher than originally forecast, contributing to the lowering of the DSCR forecast to 1.36x from 2014. However, insufficient data are available regarding the BPSI-related costs to make a firm determination. The O&M costs and hence DSCR forecasts are subject to refinement over time; however, the slight reduction is not currently a concern for the rating level. Permanent impairment of the P90 DSCR could cause downward rating pressure.

The Bonds are structured with standard protections, including a senior secured interest in Project assets, six-month debt service and maintenance reserves, limitations on additional debt (no additional senior debt, deeply subordinated debt is permitted), a distribution test of actual DSCR ¡Ý 1.20x, a debt maturity that precedes the expiry of the FIT contracts¡¯ terms by 12 months and typical project finance limitations on ProjectCo¡¯s scope. Low-risk, high-severity events mainly related to extreme weather (e.g., hurricanes, hail and lightning) are covered by the Project¡¯s insurance program.

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

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Wind Power Projects, which can be found on our website under Methodologies.

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