Research Update: Panoche Energy Center LLC Rating Off CreditWatch Negative; Outlook Developing; Contract With PG&E At Issue

Firebaugh, Calif.-based electric power generator Panoche Energy Center LLC (PEC) sells all of its output to utility Pacific Gas&Electric Co. (PG&E) under a long-term power purchase agreement (PPA). PG&E filed for bankruptcy earlier this year. Given PEC's reliance on PG&E for its revenues, the ratings are expected to remain in the 'CCC' category while PG&E's bankruptcy case progresses. We removed the rating from CreditWatch with negative implications, affirmed our 'CCC+' rating, and assigned a developing outlook to the project's debt. The outlook revision reflects that PG&E's bankruptcy plan filed September 10, 2019 does not propose to modify the terms of its existing PPAs, including PEC's. PG&E indicated in the reorganization plan that all purchase power agreements shall be

...- Firebaugh, Calif.-based electric power generator Panoche Energy Center LLC (PEC) sells all of its output to utility Pacific Gas & Electric Co. (PG&E) under a long-term power purchase agreement (PPA). PG&E filed for bankruptcy earlier this year. Given PEC's reliance on PG&E for its revenues, the ratings are expected to remain in the '###' category while PG&E's bankruptcy case progresses. - We removed the rating from CreditWatch with negative implications, affirmed our '###+' rating, and assigned a developing outlook to the project's debt. - The outlook revision reflects that PG&E's bankruptcy plan filed September 10, 2019 does not propose to modify the terms of its existing PPAs, including PEC's. PG&E indicated in the reorganization plan that all purchase power agreements shall be deemed assumed. If this stance continues and the plan is approved, we will likely upgrade our rating on PEC once we have visibility into PG&E's credit quality when it emerges from bankruptcy. If the utility's...

Research Update