Bangkok--19 Feb--Standard & Poor's
Standard & Poor's Ratings Services has assigned its 'AA' long-term rating to the following proposed Energy Northwest (ENW), Wash.'s revenue and refunding bonds:
$68.3 million Project 1 electric revenue refunding bonds series 2010-A
$289.1 million Project 3 electric revenue refunding bonds series 2010-A
$8.9 million Project 1 electric revenue refunding bonds series 2010-B
$16.8 million Columbia Generating Station electric revenue refunding bonds series 2010-B
$20.7 million Project 3 electric revenue refunding bonds series 2010-B
$72.5 million Columbia Generating Station electric revenue bonds series 2010-C (taxable Build America Bonds)
The outlook is stable.
Except for the 2010-C new money bonds, ENW is selling the bonds to refund obligations outstanding. The bonds' debt service is payable as a Bonneville Power Administration (BPA or Bonneville), Ore., operating expense.
The ratings we assigned to the ENW and other nonfederal debt paid as a Bonneville operating expense do not constitute an issuer credit rating on BPA and are not an assessment of its capacity to meet federal and nonfederal obligations.
Standard & Poor's also affirmed its 'AA' long-term rating on the several nonfederal debt obligations that BPA pays as operating expenses of its electric system. The BPA nonfederal obligations include:
$5.9 billion of ENW, Wash.'s revenue and refunding bonds;
$127.8 million of Public Utility District No. 1 of Lewis County, Wash.: Cowlitz Falls Project bonds;
$119.6 million of Northwest Infrastructure Financing Corp. (Schultz-Wautoma project) bonds;
$23.8 million of Northern Wasco Public Utility District, Ore. (McNary Dam Project) bonds;
$16.1 million of Conservation and Renewable Energy bonds; and
$9.6 million of Tacoma, Wash., Conservation System Project bonds.
"The ratings on the BPA-supported, nonfederal debt, reflect the priority of nonfederal debt over federal debt; the nearly 1-to-1 ratio of non-federal debt to federal debt, which facilitates debt service coverage of at least 2x for the nonfederal bonds so long as BPA's rates meet all financial obligations, including the federal debt; our view that BPA has a track record of strong coverage of nonfederal debt service; the ability to defer federal debt repayments, if necessary; the strong, efficient, and economical operations of the federal Columbia River Power System; the broad service territory's large number of customers, and robust liquidity that tempers the financial impacts of the regulatory lag inherent in biennial rate cases," said Standard & Poor's credit analyst David Bodek.
BPA's wholesale customers include public utilities, public utility districts, municipal districts, cooperative utilities, and investor-owned utilities. It first offers surplus energy to customers and then to other utilities in the West. Surplus sales' margins offset operating costs. A large customer base includes 61 cooperative utilities, 17 federal agencies, 14 investor owned utilities, 48 power marketers 53 municipalities and 30 public utility districts, among others.
The stable outlook reflects our assessment of the cushion that the Treasury debt provides to the ENW and other nonfederal debt and a lengthy track record of timely Treasury payments. The outlook also reflects the availability of the cost recovery adjustment clause and strong liquidity as buffers against BPA's exposure to hydrology conditions and wholesale power markets. Exposure to hydrology conditions and wholesale markets that have the potential to erode financial performance, as happened in 2009 and as BPA expects for 2010, constrains upside rating potential and could potentially impair credit quality.
RELATED RESEARCH
USPF Criteria: Electric Utility Ratings, June 15, 2007
Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers 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. Use the Ratings search box located in the left column.
Media Contact:
Ana Sandoval, New York (1) 212-438-5095,
[email protected]
Analyst Contacts:
David Bodek, New York (1) 212-438-7969
Jeffrey Panger, New York (1) 212-438-2076
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_
[email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]