August 29, 2013
Michigan

County has concerns about energy company

By Seth Stapleton, Tribune Staff Writer | Huron Daily Tribune | August 29, 2013 | www.michigansthumb.com

BAD AXE — An Exelon Corp. official was on hand to talk to the Huron County Board of Commissioners this week regarding the company’s proposal for financing for about half of its wind turbines in its portfolio.

Exelon has about 1,300 megawatts of wind turbines that are operating and the company is seeking to do project financing on about half of them, which includes 13 projects – or most of the projects it has in the state. The total megawatts of the new consolidation is 667, according to a presentation given by Exelon’s Doug Duimering, and would include Harvest I and Harvest II wind parks near Elkton and Michigan Wind II near Minden City.

However, some on the board were concerned that Exelon may be making the move because the company is faltering to a degree.

“It appears the reason we’re going through all of this is because Exelon is overextended,” said commissioner Steve Vaughan, who cited a report from Moody’s that indicated the company decreased in value from $6.1 billion to $4.2 billion.

In order for Exelon to complete its financing, the company is assembling all the projects into a new entity called Continental Wind LLC, which will be wholly owned by Exelon.

Duimering said the new corporation is expected to be established by late September, after it is reviewed and rated an investment grade entity by at least two investment agencies, such as Standard & Poor’s and Moody’s.

“That’s a condition with us going forward with the financing,” explained Duimering. “We’re anticipating it (Continental Wind LLC) will have a similar investment rating to Exelon.”

Added Duimering: “Exelon has been negatively impacted by low natural gas prices, but our ratings remain stable. Our management team has outlined, in no uncertain terms, that in terms of how they manage cash, the No. 1 priority of Exelon is to make the investment grade credit rating.”

The board also questioned how this move might affect the decommissioning process for the projects when they are no longer useful and have to be taken down. Duimering said the company was proposing to replace an investment grade corporate guarantee from Exelon with an investment grade corporate guarantee from Continental Wind – with the bond remaining in place.

“We have a decommissioning process established, and it is the established procedure,” said Chairman Clark Elftman. “We want every company that comes in here to follow that procedure. We would like to have our corporate counsel review anything that you’ve presented here this morning, and I’m sure the board will concur.”

Steve Allen, the county’s attorney, was present at the meeting and agreed to review Exelon’s proposal before the board took any further action.