DBRS Confirms Trillium Windpower, LP Series 1 Senior Secured Amortizing Notes at BBB (Stable)

On December 14, 2015, DBRS Limited (DBRS) confirmed the rating of BBB with a Stable trend on the Series 1 Senior Secured Amortizing Notes (the Notes) of Trillium Windpower, LP (the Issuer), the special-purpose entity created to finance and indirectly own the 22.9 megawatt (MW) Conestogo and 124.4 MW Summerhaven wind projects located in Wellington and Haldimand Counties in Ontario (the Project). Since July 2014, the Issuer is indirectly and wholly owned by NextEra Energy Operating Partners, LP, in turn 77.4% owned by NextEra Energy, Inc. (NextEra).

DBRS has detailed operational and financial data covering the period from the month after the Notes’ issuance until the end of September 2015. Operational performance has been good, with the average technical availability of the wind turbines being 99.0% at Summerhaven and 98.8% at Conestogo. There have been no reported major component failures.

In the last eight complete calendar quarters, total energy sales were 761.1 gigawatt hours (GWh). This represents 96.1% of the P50 production estimate, or 15.5% above the one-year P90 production estimate used in the rating case. The energy sales are after the effects of Independent Electricity System Operator (IESO)-directed curtailment (and curtailment at Summerhaven to mitigate the impact on bats). Accounting for these curtailments indicates that the wind resources would otherwise have provided for generation representing 97.7% of the P50, or 17.3% above the one-year P90 production estimate. Although encouraging, it is too early for DBRS to draw meaningful conclusions regarding the forecast of wind resources and hence energy generation. The Issuer has indicated that it expects to procure an updated wind resource study in early 2016, to be used in the context of the disposition of the Wind Data Reserve Account. DBRS will update the rating report to take new material information into account as it is received.

For the first 18 months of the Notes’ life, the wind resources have been above the one-year P90 levels indicated in the rating case used for financial projections, accounting for the debt service coverage ratio (DSCR) reaching 1.58 times (x) in 2014 and 1.28x for the first three quarters of 2015. These calculations use the accrued level of principal and interest payments to reflect debt servicing capacity, and the cash flow available for debt service is calculated after capital expenditures made on behalf of the project. The slight underperformance this year is primarily due to Q3 2015; lower wind resources and bat-related generation curtailment of 4.0 GWh.

The acoustic audit reporting requirements of the Project’s Renewable Energy Approvals have been completed; however, no feedback has been provided yet by Ontario’s Ministry of Energy. The Issuer expects to be in compliance with the sound level limits identified in the Renewable Energy Approvals.

Notes:
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.

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

The applicable methodology is Rating Wind Power Projects (December 2014), which can be found on our website under Methodologies.