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Noting a recently lowered debt burden and stable financial performance over the past five years, Fitch Ratings has upgraded its assessment of one of the state’s largest natural-gas power plants.
Kleen Energy Systems LLC, which owns and operates a 620-megawatt Middletown power plant, now carries a Fitch rating of “BBB+” on $210.5 million of outstanding debt due in 2025, up four notches from a prior rating of “BB.”
The jump means Kleen’s credit has improved from “speculative” to “good,” under Fitch’s ratings scale.
Contributing to the upgrade this week is the fact that Kleen Energy repaid a previous $435 million term loan in June 2018, and has since lowered the interest rate on its remaining term loan by extending the payoff date.
Kleen’s former private-equity owner sold the plant last year to four Japanese companies, just prior to paying off the earlier loan.
Kleen’s stability is also helped by its 15-year capacity contract with Eversource, which provides the power plant with payments in exchange for promising to be available when needed by the grid. Those capacity payments should be sufficient to pay debt service moving forward, Fitch said.
Being able to cover its debt with that capacity contract means Kleen is less susceptible to fluctuations in its other revenue streams-- the wholesale market, where Kleen sells its energy output.
Kleen was the site of a deadly explosion in Feb. 2010, caused by a procedure called a “gas blow,” as construction on the project was wrapping up.
The blast killed six and injured dozens. Soon after, Connecticut lawmakers banned the use of flammable gas to clean power plant piping.
Kleen began operating in 2011.
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