Buffett Solar Farm Downgraded as PG&E Credit at Edge of Junk

(Bloomberg) -- PG&E Corp.’s financial pain is spreading to some of the power plants that sell it electricity.

Fitch Ratings Ltd. downgraded the debt of two solar farms in California on Wednesday, citing concern about PG&E’s finances. The utility, which was downgraded last week, is the sole electricity customer for Berkshire Hathaway Energy’s 550-megawatt Topaz Solar Farms and NextEra Energy Inc.’s 250-megawatt Genesis Solar.

The state’s biggest utility owner faces as much as $17.3 billion in potential liabilities for wildfires in 2017, according to JPMorgan Chase & Co. If its equipment is found to be responsible for the deadly Camp Fire, which began Nov. 8, that may swell to $30 billion, some estimates show. The downgrades underscore PG&E’s clout in California’s power industry, and any potential threats to the company can have wide-reaching ripple effects.

Fitch now rates the $958.2 million outstanding on Topaz’s senior secured notes, as well as the $140.4 million in Genesis’s series B trust certificates, at BBB-, just above junk, down from BBB. The moves follow Fitch’s Nov. 16 downgrade of PG&E, also to BBB- from BBB.

This is Fitch’s second downgrade of Topaz since September, when the agency cut Topaz’s senior secured notes to BBB from BBB+, again because of a downgrade to PG&E.

“Berkshire Hathaway Energy continues to monitor the situation and remains focused on achieving long-term outcomes that benefit our customers and stakeholders,” a spokeswoman said in an email Wednesday. A spokeswoman for NextEra declined to comment.

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