LOS ANGELES — Moody's Investors Service upgraded the Southern California Public Power Authority's Milford Wind Project revenue bonds to Aa3 from A1 July 1. The outlook is stable.

Moody's analysts cited the project's sound operating record since its commercialization date and the growing importance of wind energy to the Los Angeles Department of Water and Power's power supply mix. LADWP uses 92.5% of power produced by the project. The other three participants are unregulated municipal electric utilities with independent rate-setting authority.

The strong take-or-pay contractual obligations for the participants to pay all costs, even if the project does not operate or is inoperable, were also cited as a strength.

Analysts also considered the fully funded maximum annual debt service reserve and the legal protections in the power purchase agreement should the seller not perform.

Another factor cited Moody's cited was the "weak counterparty," an unrated subsidiary of a low-rated company, and the uncertainty about long-term forecast of wind availability.

Bond proceeds were used to prepay for 20 years of energy to an unrated LLC, which is a unique structure.

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