TEXT-S&P cuts Boston Generating ratings

(The following statement was released by the rating agency)

Nov 21 - Standard & Poor's Ratings Services said today it lowered its
ratings on Boston Generating LLC's (Boston Gen) $1.13 billion first-lien term
bank loan, the $250 million first-lien letter of credit, both due 2013, and the
$70 million first-lien revolver due in 2011 to 'B-' from 'B'. The '1' recovery
rating on these facilities is unchanged. At the same time, we lowered the
rating on the $350 million second-lien term bank loan due 2014 to 'CCC' from
'CCC+', and the '4' recovery rating on the loan is unchanged. The outlook is
negative.

The downgrade is driven by our expectations of a lower cash flow
generation from the project, meaning the company must rely more on the
post-closing contingency account (PCCA) to meet any shortfalls in the leverage
covenant ratio requirements. If this trend continues, then we are anticipating
that the PCCA may be depleted as early as second-quarter 2009. Our revised
lower near term cash flow expectation is primarily due to:

-- Significant reduction in dispatch of the Mystic 7 power plant,
reported on Oct. 15. This is expected to continue or even deteriorate through
2009 depending on the relative differential between oil and gas prices;

-- Lower net energy margins from all facilities due to overnight losses
are expected to continue, but at a reduced level given the decline in fuel
prices;

-- A major forced outage at the Fore River facility on Oct. 20, 2008 that
has reduced the facility's capacity by half. The project expects the affected
turbine is to return to service in February 2009. The business-interruption
insurance policy triggers after 90 days from the outage; and

-- Costs associated with the Regional Greenhouse Gas Initiative starting
in 2009 that are not a pass-through to the project under the hedge.

Longer term challenges to cash flow and refinancing risk in 2013 include
lower capacity prices continuing through mid-2012. The next auction is in
December 2008 for the forward capacity market (FCM) capability period May 2011
through April 2012.

The negative outlook on Boston Gen reflects our concern that financial
performance may continue to deteriorate. We could lower ratings further if the
project indicates in its third-quarter results (expected to be announced on
Nov. 25) that net energy margins will be lower than expected in the near term,
putting greater pressure on liquidity and/or if the FCM auction prices in
December continue to yield below the floor price of $4.50 per kilowatt-month
that will adversely impact the refinancing risk in 2013. Prospects for an
outlook revision to stable in the near term are unlikely given the dwindling
liquidity and that the FCM is fixed through May 2011.

Complete ratings information is available to subscribers of
RatingsDirect, the real-time Web-based source for Standard & Poor's credit
ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings
affected by this rating action can be found on Standard & Poor's public Web
site at www.standardandpoors.com; select your preferred country or region,
then Ratings in the left navigation bar, followed by Credit Ratings Search.
Primary Credit Analyst: Trevor D'Olier-Lees, New York (1) 212-438-7985;

trevor_d'olier-lees@standardandpoors.com
(New York Ratings Team)