S&P puts Heritage Power on watch

S&P said it placed Heritage Power LLC’s B senior secured rating on CreditWatch with negative implications.

“The CreditWatch placement reflects the possibility of a negative rating action. We anticipate future clearing prices in select capacity markets, particularly PJM, will be materially lower than previously expected. We are making some significant revisions to our assumptions, including Eastern MAAC (Emaac) and Mid-Atlantic Area Council (MAAC), which are Heritage's main zones,” S&P said in a press release.

For Emaac, S&P said it now projects it will clear at about $95/megawatt (MW)-day in 2023-2024 and $110/MW-day in the 2024-2025 delivery years. “We previously assumed $140/MW-day starting in the 2023-2024 auction. For MAAC, we assume a price of $80/MW-day for 2023-2024 and $90/MW-day for the 2024-2025 delivery years, compared with $120/MW-day starting in the 2023-2024 auction.”

The lower prices translate into lower near-term cash flow, the agency said.

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