Bangkok--25 Jun--Standard & Poor's
Standard & Poor's Ratings Services revised its outlook on the 'BBB' long-term rating and underlying rating (SPUR) on Arkansas River Power Authority, Colo.'s power revenue improvement bonds to stable from negative based on the commercial online status of the Lamar repowering project, the authority's flagship generating asset. Standard & Poor's also affirmed its 'BBB' rating on the authority's debt.
In 2008, Standard & Poor's revised the outlook to negative based on its concerns about the then-second unplanned issuance of completion bonds due to ongoing changes in the project's cost and scope.
Raton, N.M., one of the authority's larger members, is actively engaged in litigation with the authority.
"While we remain concerned about the as-yet unresolved member discord, we feel the authority's existing legal provisions could allow for any necessary reallocation of costs among the other members with a reasonable effect on member rates should the courts provide Raton with some type of contractual relief," said Standard & Poor's credit analyst Theodore Chapman.
The ratings continue, in Standard & Poor's opinion, to reflect the authority's participating member municipalities having limited service area economies with below-average income indicators and employment bases that, in general, revolve around agribusiness or rural economies; the authority has a relatively highly leveraged position as a result of funding this project; and dependency on a single generating asset for base-load requirements, and the associated risks, above and beyond its Western Area Power Administration allocation, which historically provides the authority with about one-fourth of its energy needs -- Pro forma projections indicate that nonfirm off-system sales will account for more than 10% of operating revenues for the authority, adding further risk to the authority's revenues should the plant not dispatch at all or as economically as projected.
The rating action affects roughly $142.6 million of debt outstanding.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095, [email protected]
Analyst Contacts:
Theodore Chapman, Dallas (1) 214-871-1401
Alexander M Fraser, Dallas (1) 214-871-1406