S&P rates Teton Power loan B+

Standard & Poor's said it assigned its B+ rating to Teton Power Funding LLC's new $195 million seven-year senior secured term loan facility.

The outlook is stable.

Proceeds from the financing will be used to fund a portion of the recent acquisition by parent company ArcLight Capital Partners LLC of all the interests in UtilCo LLC from Aquila Inc.

S&P said ratings are based on the following risks: an increased reliance on merchant plants; asset concentration risk associated with the Onandaga project, the portfolio's largest overall cash contributor; and refinancing risk associated with the remaining debt balance beyond the maturity of the term loan (2011).

However, these risks are offset by the following strengths: portfolio diversification: the asset portfolio is diversified by geography, revenue source, and technology; all 12 generating assets are fully contracted with power off-take agreements ranging in term from 2005 to 2037. eighty-nine percent of counterparties tied to the power off-take agreements are investment grade; all 12 generating assets display high availability factors and low forced outage figures; no construction risk. All 12 generating assets are fully constructed and operating.

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