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IPED Wind Conference: Debt Panel Santa Fe, NM July 26, 2007

The Rating Agency Perspective.

Peter Murphy, Director

Standard & Poor’s

Public Power Sector Spokesperson

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Key Issues

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Key Issues

Renewable Energy and Global Warming

Project Finance issues

“System” debt considerations

Standard & Poor’s wind project ratings

Standard & Poor’s Public Power Ratings

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Renewable Energy and Global Warming

• Genie is out of the bottle. U.S. regulation likely, extent unknown

• Cap and Trade, or Carbon Tax

• U.S. utilities targeted. Will the pain be shared.

• Ratepayers

• Clean Coal Technology, Nuclear

• Efficiencies, Demand-Side Management, Conservation

• Fuel-Switching

• The role of renewables? Wind is the leading choice

• Renewable Portfolio Standards

• Federal Incentives

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Project Financings – Key factors

• Contract Structure

• Legal

• Regulatory Local, State, Federal

• Counterparty Contractors, Off-takers

• Construction

• Technology Evolution, and risk

• Operations Wind issues, Equipment

• Competitive Exposure Regional pricing

• Financial Debt Service Coverage

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System Financing Reduces Risk

• Pledge of all system revenues

• Parity with other generation, transmission, and distribution debt

• Wind project scale is minimal compared to total

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Rated Wind Projects

U.S.

• Energy Northwest, WA, 9 Canyon Wind (Phase I, II, III) A-/Stable **

• FPL Energy American Wind LLC BBB-/Stable

• FPL National Wind LLC BBB-/Stable

• FPL Energy National Wind Portfolio LLC BB-/Stable

• FPL Wind Funding LLC (Calif, New Mexico) BB-/Stable

Europe

• Max Two Ltd. (Breeze One) BBB-/Negative

• CRC Breeze Finance S.A. (Breeze Two) BBB/Stable

• Breeze Finance S.A. (Breeze Three) BBB/Stable

• Alte Liebe 1 Ltd. BBB-/Stable

** rating based on 10 public utilities’ system-wide pledge

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Public Power is Solidly Investment Grade(ratings as of July 1, 2007)

AA+ 1 (0.4%)

AA 24 (10.5%)

AA- 31 (13.5%)

A+ 53 (23.1%)

A 37 (16.2%)

A- 50 (21.8%)

BBB+ 17 (7.4%)

BBB 10 (4.4%)

BBB- 5 (2.2%)

BB+ 1 (0.4%)