Moody's cuts West Deptford Energy

Moody's Investors Service said it downgraded West Deptford Energy Holdings, LLC's senior secured credit facilities to B3 from B2. The debt facilities consist of a $445 million seven-year senior secured term loan due 2026 and a $55 million five-year senior secured revolving credit facility due 2024.

“The rating downgrade to B3 reflects our view that financial metrics will continue to underperform as low PJM capacity auction prices weigh on future cash flows in combination with continued weak energy margin contributions owing to the impact of the Regional Greenhouse Gas Initiative (RGGI) on New Jersey-based plants' competitive position relative to non-RGGI neighbor states,” Moody’s said in a statement.

The agency added, “West Deptford's weak energy margin contributions are a critical negative credit factor. While the plant produced a 62% capacity factor in the third quarter of 2022 and generated roughly $19 million in energy margins for the quarter (net of hedges, VOM, and RGGI), capacity utilization on an annual basis is expected at around 28% in 2022; which is well short of the 60-70% utilization anticipated at the loan's financing.”

The outlook remains negative.

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