OrCal Geothermal financial rating provides insight into operations
Heber geothermal power plant complex, Imperial Valley, California/ U.S. (source: Ormat)
Alexander Richter
3 Apr 2012
A recent financial rating report on Ormat Technology owned OrCal Energy, which operates the Heber 1 and 2 geothermal power plants in the Imperial Valley, California provides a good insight into the current operations and work done on the plants.
In a release earlier this month, Fitch Ratings provided details on its rating on senior (debt) notes for OrCal Geothermal Inc., a special purpose company used by Ormat Technologies to acquire the Heber 1 and Heber 2 eothermal power plants in the Imperial Valley in California, a while back.
The release provides some interesting insight into the operation of both plants. Financial rating agencies are providing credit ratings and the reports highlight arguments for a particular rating of the financial vehicle, here the affirmation of the “BBB-” rating with a “stable” outlook.
According to the release there is extensive planned capital enhancements at Heber 1 planned by the company.
“Heber 1 has been showing typical geothermal fluid losses over the last few years that have reduced its production. OrCal is addressing the performance of Heber 1 by drilling new wells over the next 12-18 months with the expectation of bringing on incremental production in the coming years, which Fitch views as supportive of the current rating. In addition, OrCal is planning significant discretionary modernizations of the turbine and generator equipment as well as balance of plant upgrades that could benefit Heber 1 longer term.
The production enhancements at Heber 1 are expected to be paid through an existing subordinated loan agreement from OrCal.”
“OrCal is negotiating with various parties to sign a new PPA to replace an SRAC-based PPA that expires in 2015 for 48% of the project’s total capacity. OrCal’s status as a qualifying facility and a base-load renewable generator puts its power in demand in California.
OrCal is a special-purpose company created to acquire the Heber 1 and Heber 2 geothermal power facilities (the Heber power plants) located in Imperial County, CA. The Heber power plants sell electric energy and capacity to SCE under two
separate Standard Offer No. 4 PPAs expiring 2015 and 2023. OrCal also owns the Gould 1 and Gould 2 plants which consist of a series of upgrades designed to enhance production and operating efficiency at the Heber power plants. The Heber South power plant, which became operational in 2008, supplies energy to Southern California Public Power Authority under a separate fixed-price PPA.
OrCal is an indirect, wholly owned subsidiary of Ormat Technologies, Inc.
Source: Fitch Ratings release via Reuters
