Crockett Cogeneration Notes Rating Lowered To 'B' And Remains On CreditWatch Negative After PG&E Co. Rating Action


  • Crockett Cogeneration (Crockett) sells all of its output to utility Pacific Gas & Electric Co. (PG&E) under a long-term power purchase agreement (PPA).
  • We lowered the ratings on PG&E on Jan. 7, 2019, following the announcement from the board of directors that it is reviewing PG&E's management, finances, governance and structural options. The ratings remain on CreditWatch negative because of the souring political and regulatory environment and our view of the limited options that the company has to effectively manage its operating, financial, and regulatory risks.
  • Given the complete reliance on PG&E for all its revenues under its PPA, we are lowering our rating on Crocketts's $295 million senior secured notes due March 30, 2025 to 'B' from 'BB-'. The rating remains on CreditWatch with negative implications.
  • The CreditWatch Negative listing reflects the possibility that further downgrades on utility PG&E will trigger a change in the rating on the notes of Crockett.
  • The recovery score remains 3 (rounded estimate: 55%), but now reflects that the most likely path to default would result from a bankruptcy of PG&E.
SAN FRANCISCO (S&P Global Ratings) Jan. 11, 2019--S&P Global Ratings today 
took the rating actions listed above. California-based Crockett is a 
240-megawatt natural-gas-fired electric cogeneration plant project in 
Crockett, California, which is about 25 miles east of San Francisco. Crockett 
is a qualifying facility selling power to PG&E under a PPA that expires on May 
26, 2026, and steam to C&H Sugar Co. Inc. under an agreement that also expires 
in 2026.

The CreditWatch with negative implications listing on Crockett mirrors the 
listing on PG&E. Given that the project's rating is now capped by the senior 
secured rating of PG&E, further rating declines of PG&E would likely result in 
lockstep reductions in the credit rating of Crockett.
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