DBRS Comments on Clover Limited Partnership Following Recent Events Affecting Pacific Gas and Electric Company

DBRS Limited (DBRS) is commenting on Clover Limited Partnership (the Issuer; rated BBB with a Stable trend by DBRS) following potential new material liabilities for Pacific Gas and Electric Company (PG&E) as a result of the wildfires in Northern California. As discussed in DBRS’s rating report dated November 7, 2018, PG&E is one of six power purchase agreement (PPA)/swap counterparties for the portfolio of operating wind and solar power-generating assets partially owned by the Issuer. The PG&E PPA is a fixed-price 20-year agreement (expiry in May 2034) for the delivery of renewable energy credits (RECs) for the Blackspring Ridge wind facility located in Alberta. The payments under the REC PPA account for approximately 7% of the Issuer portfolio’s EBITDA. As such, any loss of REC PPA revenue would have a relatively limited financial impact on the overall portfolio cash flows.

There is currently no change in DBRS’s view of the credit, because loss of the revenue from the REC PPA is considered a remote event. In addition, the RECs are a viable, tradeable commodity, and the Issuer would likely have options with respect to the sale of the RECs in a worst-case event of termination of the current PG&E REC PPA. However, DBRS will continue to monitor events surrounding PG&E and any potential adverse impact on portfolio cash flows.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodologies are Rating Wind Power Projects and Rating Solar Power Projects, which can be found on dbrs.com under Methodologies.

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