Fitch Ratings said Sept. 12 that the Louisiana Energy and Power Authority is developing a new, gas-fired, 64-MW power plant as it looks to diversify its generating mix.
Fitch assigned an ‘A-‘ rating to the Louisiana Energy and Power Authority’s (LEPA) proposed $152.7m of power project revenue bonds. The bonds are expected to price during the week of Sept. 23. Proceeds will be used to fund construction of LEPA Unit No. 1, a 64 MW natural gas combined cycle facility.
The bonds are secured by the net revenues of the project which include payments received from the six project participants pursuant to power sales contracts, payable as an operating expense of their respective utility systems.
LEPA has arranged for all of the project’s output to be sold under take-or-pay contracts with municipally-owned electric systems that are members of LEPA. The purchasers are obligated to pay for their respective shares of all project costs, including debt service. The three largest purchasers, which include the cities of Houma (LA), Morgan City (LA), and Plaquemine (LA), together account for 74.2% of project output.
Fitch expects LEPA to execute a turnkey engineering, procurement, and construction (EPC) contract with an experienced EPC firm in the coming months.
The project is expected to supply the participants with competitively priced natural gas-fired capacity and energy which upon completion should enable the participants to reduce reliance on older, less efficient generation. The project’s proximity to several U.S. Gulf Coast interstate pipeline systems and access to ample capacity and gas supplies will mitigate the risks associated with volatile fuel costs, Fitch added.
LEPA is a nonprofit wholesale power supplier that was created in 1979 for the benefit of its members. As of Sept. 1, 2013, LEPA reported 17 members which are dispersed throughout Louisiana.
LEPA is currently pursuing a strategy to supplement the existing resources utilized to supply wholesale power to certain members, which include a 104.6 MW participation in the Rodemacher No. 2 coal-fired facility, federal hydro resources, and the assignment of member-owned generation. As an alternative to higher cost and potentially more volatile purchased power, LEPA elected to proceed with the 64-MW project in late 2010. The modern, combined-cycle technology will provide the authority with a more efficient baseload resource to replace a portion of older vintage member generation, Fitch noted.
The project is to be constructed in Morgan City, La. The plant will have a nameplate capacity of 64 MW, but is expected to operate at a net output of 61.1 MW based on projected availability. Project construction is scheduled to commence in April 2014 with commercial operation expected by September 2015.