Standard & Poor’s has placed its rating for $29.3 million of power revenue bonds issued by Independence County in 2004 on negative watch after flooding from heavy rains resulted in minor damage to generating equipment and stopped work on an expansion project.
The bonds, which are insured by ACA Financial Guaranty Corp., were originally given an underlying rating of BB-plus but were downgraded to BB-minus in early March. ACA has been downgraded recently to CCC by Standard & Poor’s.
The county used the bond proceeds to build three hydroelectric power generation facilities in existing lock and dam structures on the White River. Clarksville has agreed to purchase electricity from the project for 32 years.
The rating agency said the project has used the debt service reserve to support the last two payments and will need to use it again for a $2 million payment due in May. The current balance of the debt service reserves is about $1.9 million and the project has accrued about $1 million for the May debt service payment.
An effort to raise one dam’s height by three feet to provide additional generating capacity has been halted due to high water. Water releases from dams upstream of the project are being controlled to prevent extensive downstream flooding.