Fitch Affirms East Coast Power LLC’s Bonds at ‘BBB’

Fitch Ratings has affirmed East Coast Power LLC’s series B $850 million ($320.4 million outstanding) senior secured notes due 2008, 2012 and 2017 at ‘BBB’. The rating affirmation reflects the project’s continued strong financial performance and reduced total leverage. In 2006, the debt service coverage ratio (DSCR) for the rated notes exceeded 2.0 times (x), and the DSCR through the third quarter of 2007 exceeded 3.2x. Fitch has evaluated East Coast Power’s credit quality on a stand-alone basis, independent of the credit quality of its owner, a subsidiary of General Electric Capital Corporation. Fitch believes it is unlikely that General Electric will issue new debt to replace structurally senior subsidiary debt retired in 2006.

East Coast Power derives most of its revenues through long-term energy service agreements providing energy, capacity and steam to investment-grade counterparties, resulting in relatively stable and predictable cash flow. Merchant sales of surplus capacity and energy comprise less than five percent of earnings before interest and depreciation, minimizing merchant sales risk. Operating risk is low with historically high reliability for the project’s facilities. Forced outages on two combustion turbine units in 2006 and three major maintenance outages in 2007 led to repairs and equipment upgrades that resulted in increased capacity and improved fuel efficiency. A modified gas supply agreement effective through 2017 extends a beneficial tier of service providing lower prices for gas in excess of base quantities, and provides increased nomination flexibility. East Coast Power consistently has been able to procure fuel at prices favorable to its contractual index, resulting in fuel cost savings shared with its primary counterparty. The variable-frequency transformer (VFT) transmission project is under construction and scheduled for commercial operation in late 2009. The VFT project is fully funded by equity contributions from other General Electric Company subsidiaries, although East Coast Power retains 15% ownership. The VFT project is expected to generate positive cash flow for East Coast Power with minimal credit concerns for the rated notes.

East Coast Power owns interests in two gas-fired cogeneration facilities in Linden, N.J. Linden Venture sells up to 645 megawatts of capacity and energy to Consolidated Edison Company of New York, Inc. under a power purchase agreement expiring in 2017. Linden Venture also supplies steam to a ConocoPhillips refinery and Infineum USA petrochemical facility. The 165 megawatt Linden 6 facility provides steam to Linden Venture and electric power to the ConocoPhillips and Infineum facilities under long-term agreements.

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