Fortis Merchant Banking led a $280 million senior secured financing and signed a 29 Bcf, 10-year financial fixed-price gas agreement with Sherbino I Wind Farm LLC, a joint venture in Pecos County, TX, owned by subsidiaries of BP Alternative Energy North America Inc. and NRG Energy Inc. The hedge was designed to accommodate wind intermittency risk and will provide Sherbino with greater revenue stability. Fortis has structured, underwritten and will begin to syndicate the credit facility, which will be converted into a 15-year senior secured term loan at the onset of commercial operations scheduled to begin during the second half of 2008. Fortis Energy Marketing and Trading (FEMT) provided a fixed gas hedge based on forward notional heat rates. The hedge agreement begins Jan. 1, 2009 and runs through 2018. FEMT structured the transaction; terms of the hedge were not disclosed. “The Sherbino I Wind Farm transaction complements the portfolio of hedge transactions Fortis has executed for wind project developers while meeting the requirement of both sponsors and creditors with the backing of Fortis’ ‘AA-‘ credit,” said David Duran, managing director of origination and marketing at Fortis. Currently under construction, the Sherbino I Wind Farm is a 150 MW project that consists of 50 Vestas V90s turbines. FEMT was created when Fortis acquired Cinergy Marketing & Trading from Duke Energy in late 2006 (see Daily GPI, June 28, 2006).

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