DBRS Morningstar Confirms Ratings on Trillium Windpower, LP and Maintains Positive Trends

DBRS Limited (DBRS Morningstar) confirmed the Issuer Rating and Series 1 Senior Secured Amortizing Notes rating of Trillium Windpower, LP (the Issuer) both at BBB with Positive trends. The Issuer is a special-purpose entity created to finance and indirectly own the 22.9-megawatt (MW) Conestogo and 124.4 MW Summerhaven wind farms in Ontario (collectively, the Project). The Project benefits from attractive long-term fixed power prices under feed-in tariff contracts with the Independent Electricity System Operator (IESO; rated A (high) with a Stable trend by DBRS Morningstar) for 20 years.

The Project continued its strong operating performance in 2018 and into the first three quarters of 2019 but fell slightly short of its P50 targeted generation (including curtailment). Average wind turbine technical availability has been above plan with no reported major component failures. For 2018, availability was 97.9% for Conestogo and 97.0% for Summerhaven, while for the first nine months of 2019, it was 98.9% and 98.1%, respectively (against plan (95.8%) for both wind farms). The Project’s Summerhaven facility is subject to economic curtailment but is compensated for almost all curtailment by the IESO, which forecasts the foregone energy that would have been generated free of curtailment based on the wind resource and other assumptions. Incorporating curtailment, the Project’s production would be just below 99% of the P50 rating case for 2018. The strong generation (including the IESO-compensated foregone production) resulted in debt service coverage ratios (DSCRs) of 1.57 times (x) and 1.48x for 2018 and the last 12 months ended September 2019, respectively, above the minimum rating-case DSCR of 1.46x. Operating expenses for 2018 were approximately 2% below the rating case and represented approximately 14.7% of operating revenues. Operating expenses for 2019 are expected to be modestly higher than plan because of the timing of expenses related to pitch cylinders, unplanned main-bearing replacement, and climb-assist materials and installation costs. DBRS Morningstar may upgrade the ratings if production for full-year 2019 is at or above the P50 level and expenses are within range of plan with a commensurate DSCR.

The Issuer is indirectly and wholly owned by Cordelio Power Inc. (Cordelio Power) through wholly owned subsidiaries. On June 29, 2018, a subsidiary of NextEra Energy Partners LP (whose parent company is NextEra Energy, Inc.) completed the sale of NextEra Energy Canada Partners Holdings, ULC, the former project owner, to Cordelio Power. Headquartered in Toronto, Cordelio Power was launched in June 2018 by Canada Pension Plan Investment Board (rated AAA with a Stable trend by DBRS Morningstar) to complete the purchase of a portfolio of wind and solar assets in Ontario. The Project continues to be operated by NextEra Energy Canada Operating Services, Inc. with no change in contracts. The administration of the Project, however, is now conducted by Cordelio AdminCo Inc., a wholly owned subsidiary of Cordelio Power, with new Administrative Service Agreements in place.

Notes:
The principal methodology is Rating Wind Power Projects, which can be found on dbrs.com under Methodologies & Criteria.

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 under Related Documents or by contacting us at info@dbrs.com.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

For more information on this credit or on this industry, visit www.dbrs.com or contact us at info@dbrs.com.

DBRS Limited
DBRS Tower, 181 University Avenue, Suite 700
Toronto, ON M5H 3M7 Canada