Fitch affirms Great River Energy's (Minnesota) First Mortgage Bonds at 'A-'; Outlook Stable
NEW YORK--As part of its ongoing surveillance efforts, Fitch Ratings affirms its 'A-' rating on Great River Energy’s First Mortgage bonds. The Outlook is Stable.
Supporting the 'A-' rating is Great River Energy’s competitive rates in the region, an experienced management team, and long-term wholesale power contracts with its 28 members that extend to 2045. While load growth has slowed, the members show continued resiliency and diversity. Non-member sales have declined significantly due to the slowdown in the economy and surplus power in the region, however, Great River Energy demonstrated its willingness and ability to implement rate increases in order to maintain financial metrics commensurate with this rating category.
Looking forward, key rating drivers include:
Great River Energy has over 2,600 megawatts (MW) of owned and purchased power. Owned generation is primarily coal and natural gas-fired. Two coal plants provide 1,320 MW of capacity while Great River Energy owns 1,174 MW of gas and oil peaking units. New generation investment is occurring to meet ongoing load growth in the service territory. Construction of Great River Energy’s Spiritwood Station, a 62 MW base load combined heat and power generating facility is proceeding as planned and is expected to be in service by the fall of 2010. Great River Energy is also constructing a peaking facility at Elk River, which is expected to be on line in July 2009. Great River Energy’s transmission system is extensive and it plans to continue to expand its system through the 'CapX 2020' transmission project, a multi-utility effort designed to meet regional transmission needs for Minnesota and surrounding states.
Minnesota’s renewable portfolio standard (RPS) requires 12 percent of capacity from renewable resources by 2012. With contracts in place to purchase 317 MW from six different wind projects, Great River Energy is on course to meet the 2012 target. The CapX 2020 transmission project should also provide transmission access for renewable resources to meet future requirements of the RPS. Great River Energy’s current generation is heavily weighted towards coal. While Great River Energy is working to diversify into additional peaking gas and wind resources to meet member's growth needs, Great River Energy is very focused on the proposed carbon legislation and the potential impact that it would have on its members. Great River Energy has developed and is implementing an innovative coal project aimed at reducing moisture content from lignite and resulting in improved plant efficiency and reductions in carbon output. Member wholesale rates are projected to increase to 73.7 mills by 2014 from 57.1 mills in 2008.
Great River Energy is a generation and transmission (G&T) cooperative providing wholesale electric energy to 28 member distribution cooperatives, serving more than 637,000 primarily residential and small-commercial customers. Great River Energy’s members are located throughout 71 counties in Minnesota and serve a population of 1.7 million people. Great River Energy is the fourth-largest G&T cooperative in the United States and the second-largest wholesale power provider in Minnesota.
Fitch’s rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
