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Navigating Credit Risks and Performance Issues in Power Utility Financing

This document explores the various credit risks associated with FinCo, ECS, and ECT, emphasizing critical performance risks within the power utility sector. It addresses potential financial leakage to FinCo, escalation threats, demand charge avoidance strategies, and governance concerns related to the rights of Limited Partners (LP) over General Partners (GP). Additionally, it covers financial obligations such as annual charges, utility demand charges, and tax implications. Stakeholders must understand these dynamics to mitigate risks effectively and ensure sustainable operations and financing.

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Navigating Credit Risks and Performance Issues in Power Utility Financing

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  1. Risks to FinCo • TW Credit Risk • ECS/ECT Credit Risk • Power Utility Performance Risk Debt Equity • Issues • Potential leakage to FinCo: • Escalation • Demand Charge Avoidance • Right of LP to remove GP without cause 97% 3% FinCo ECS 81% LP 19% GP EPC Contractor $5.1 MM for two powertrains Turnkey Fuel Gas & Annual Charge ECS LLC/LP $ $ Fuel Gas NTUA TW PNM Shipper e- e- HP-Hours Transportation $ Fuel Gas O&M Services $ $ ECT ECS TW Gas 100% Owned • Annual Charge = • O&M • Utility Demand Charge- flat $66,000/month • Taxes-Sales Tax= 5.6% • Customer Charge: $200/month • Customer Charge: $100,000/yr (paid in July) ECT

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