S&P puts Power Receivable, Power Contract on watch

Standard & Poor's said it placed the BBB ratings on Power Receivable Finance LLC's $432.45 million of senior secured notes and Power Contract Financing LLC's $802 million of senior secured notes on CreditWatch with negative implications, as well as the BB+ ratings on Power Receivables' $22.2 million of subordinated notes.

The action follows the U.S. Supreme Court ruling on long-term wholesale energy contracts in which it requests that the 9th U.S. Circuit Court of Appeals and the Federal Electric Regulatory Commission re-examine the terms of such contracts. The court's decision was rendered in Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington, and American Electric Power Service Corp. v. Public Utility District No. 1 of Snohomish County, Washington.

The agency said that to the extent this ruling and any revisiting of the rates results in the potential for different terms in the power sales agreement between California Department of Water Resources and Power Receivable or Power Contract, or the rates in the mirror power purchase agreement with J. Aron (for Power Receivable) or Morgan Stanly Capital Group (for Power Contract), S&P may downgrade the ratings.

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