GenConn Energy, a 50-50 joint venture between NRG Energy, Inc. and The United Illuminating Company (UI), a subsidiary of UIL Holdings Corporation, has reached a significant milestone in the development of its peaking generation projects by closing on $534 million of project financing.
The two 200-megawatt (MW) projects, located at NRG’s existing sites in Milford and Middletown, Connecticut, received financing through a bank syndicate comprised of nine major lending institutions. The GenConn project financing includes a seven-year project-backed term loan and a five-year working capital facility, which together total $291 million. In addition, UI and NRG have each closed an equity bridge loan of $121.5 million, which together total $243 million. The combined financing package, which is supported by 30-year contracts approved by the Department of Public Utility Control (DPUC), will allow for the completion of these important construction projects and benefit Connecticut energy consumers.
“Securing the financing for these projects is an essential step in moving these projects forward and meeting our contractual and regulatory objectives. In addition, GenConn has executed all major equipment, construction and service contracts associated with the projects,” said Anthony Marone, GenConn president and UI’s vice president of client services. “We were looking to minimize the cost of capital, reduce interest rate uncertainty, mitigate financing risk and maintain full transparency of the structure, compatible with the cost-of-service approach mandated for these projects.”
The new units will have fast-start capability, which is especially important during extreme weather conditions, such as hot summer days or cold winter nights, and use advanced technology emissions controls.
“The construction of the two peaking plants will enhance the electric grid reliability and bring almost 135 construction jobs per project to the state,” said Jonathan Milley, GenConn chief executive officer and vice president of development for NRG’s northeast region. “Selection of such solid projects by the Connecticut DPUC that are able to obtain financing in this uncertain credit environment is a testament to the strength of the proposal presented by NRG and UI as well as the rigorous procurement process conducted by the DPUC. Once in operation, these projects will add value to Connecticut and all of its energy consumers.”
Both projects will feature four new fast-start 50 MW General Electric LM 6000 dual-fuel capable combustion turbines. Construction is already underway at NRG’s Devon Station, located in Milford, and is expected to be completed in June 2010. Construction at NRG’s Middletown Station will begin in February 2010 and is expected to be completed in June 2011.