Research Update: Invenergy Thermal Operating I LLC Debt Ratings Remain On CreditWatch Negative On Updated Information Following Outage

One of Invenergy Thermal Operating I LLC's (ITOI) power plant assets, Ector County Energy Center LLC (Ector), a peaking plant in West Texas, was offline and did not dispatch for 11 days during Winter Storm URI in February. Its heat rate call option with a third party exposed it to purchase power at unusually high power prices that peaked at $9,000/MWh. Absent a favorable settlement as part of the standstill negotiations, we expect Ector has a large potential liability that is owed to this hedge counterparty. We have gained more information about the events during Winter Storm Uri and reviewed in detail the credit agreement, specifically the impact of an adverse judgement against Ector on the credit quality of the

...- One of Invenergy Thermal Operating I LLC's (ITOI) power plant assets, Ector County Energy Center LLC (Ector), a peaking plant in West Texas, was offline and did not dispatch for 11 days during Winter Storm URI in February. Its heat rate call option with a third party exposed it to purchase power at unusually high power prices that peaked at $9,000/MWh. Absent a favorable settlement as part of the standstill negotiations, we expect Ector has a large potential liability that is owed to this hedge counterparty. - We have gained more information about the events during Winter Storm Uri and reviewed in detail the credit agreement, specifically the impact of an adverse judgement against Ector on the credit quality of the term loan B at the holding company. Our preliminary assessment is that the hedge counterparty's claim is not secured beyond a $7 million LOC and should not result in any upstream exposure to this liability for ITOI lenders. However, if Ector cannot pay an obligation following...

Research Update