The IE report typically includes a review of operating period risks. That review should include assessment
of: (1) the reasonableness of expected operating costs and maintenance costs; (2) expected operating levels;
(3) expected maintenance and repair costs; (4) spare parts supply (can reduce downtime for unplanned
outages); (5) future major maintenance and capital costs; and (6) the useful life of the assets. Control of
maintenance costs and the availability of spare parts are verified.
reporting commonly includes (1) annual and interim financial reporting; (2) annual capital budgets; (3)
availability and efficiency data; (4) energy sales volume data; (5) covenant compliance certificates (con-
firming that debt service coverage ratio (DSCR) tests have been met); (6) annual insurance certificates
and any other compliance certificates; (7) IE reports, if major unanticipated repairs have been required;
(8) environmental permits and licensing; and (9) in general, reports on any unexpected change in plant
condition or operating performance. Careful review of operating and financial performance data supports
operating risk surveillance.
formance, actual power production and/or other operating performance criteria. In power projects, for
example, plant availability and energy (or heat rate) efficiency are key factors in plant competitiveness.
Origin's analysis will include a review of peer group data for comparisons with similar facility types and
related average availability and heat rate, and incorporates the IE's review of expected performance.
new technology is involved, unit availability can be unpredictable, especially in the initial start-up phase.
A manufacturer should be able to demonstrate success across its installed fleet of similar units and/or
show that so-called teething issues have been resolved or are mitigated by more comprehensive warran-
ties and technical support. Ineffective operating procedures and management can reduce plant availability
and efficiency. As such, proven prior experience managing similar project facilities reduces operating risk.
Careful oversight by the manufacturer during the first few critical years is also positive for achieving
planned operating metrics. Given the long life of most projects, issues such as environmental compliance
and capital costs associated with tightening environmental and emission controls are reviewed. This is
especially relevant for technologies that are currently considered less desirable from an environmental
standpoint (e.g., coal-fired power projects).
also be high. An established track record of technology performance and proven capability on the part of
an experienced O&M contractor in maintaining similar projects and/or a manufacturer-managed main-
tenance program mitigates technology risk. For example, hydroelectric facilities generally experience very
high levels of reliability, with the lowest forced outage rates (about 1%). This is attributable to a stable,
proven technology that has been in use for decades, and the fact that there is no thermal component to
the production process. If properly maintained, hydroelectric facilities also feature very long asset lives
compared with all other generating assets.