The affirmation is based on Fitch's expectation that default is likely and may be accelerated if Coso fails to meet a pari passu reimbursement obligation that could arise if its letter of credit (LC) is not extended past its expiration date in late 2015. Default is otherwise likely to occur by 2017.
The rating is also driven by underperformance of the geothermal resource which has lowered net operating capacity at the project's three interlinked geothermal power plants. With the decline in the geothermal resource, energy revenues have fallen to levels that are not sufficient to meet debt obligations.
Coso Geothermal Power Holdings, LLC leases and operates three interlinked geothermal power plants located in Inyo County, CA, with installed nameplate capacity of 302 MW.
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