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 Seattle City Light
News Release |
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Subject:
Moody’s reaffirms City Light’s credit rating
Rating agency cites utility’s continuing financial recovery |
For Immediate Release:
6/30/2003 12:00:00 AM |
For More Information Contact:
Scott Thomsen (206) 386-4233
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SEATTLE- Citing "steady progress" in Seattle City Light's recovery from the energy crisis, Moody's Investors Service announced today that the utility will maintain its Aa3 credit rating for existing debt and $256.815 million of revenue bonds scheduled for sale in mid-July.
"This is a strong rating," said Seattle Mayor Greg Nickels. "Moody's analysis affirms that City Light is on the right financial course."
Moody's said City Light is on schedule with its financial recovery plan, including retirement of short-term debt made necessary by drought and inflated energy prices during 2000-2001. The rating agency also cited the utility's continued access to the City of Seattle's cash pool, the financial plan's conservative forecasts for water and energy prices, greatly reduced exposure to the wholesale power market, and "the fundamental longer-term strength" of the utility's low-cost, owned generation.
"We're pleased that Moody's has seen fit to maintain our good rating," said acting City Light Superintendent Jim Ritch. "This is further evidence that we have put the energy crisis behind us and are moving on."
City Light paid off $182.2 million in short-term Revenue Anticipation Notes earlier this year and is on schedule to retire another $125 million in RANs in November. After that, the utility will continue to have access to the city's cash pool as a source of liquidity. In 2004, City Light will once again achieve normal operating cash balances of $30 million and begin contributing a portion of operating revenues to the capital program. The speed of the financial recovery will depend on water conditions and wholesale electricity prices.
While reaffirming its strong rating, Moody's said it would maintain a negative credit outlook for City Light, reflecting continued financial pressure for the utility and general uncertainty regarding electricity industry markets.
In its analysis, Moody's also noted:
- Improved financial margins, thanks to higher retail rates and a significant reduction in the cost of City Light's power purchases.
- The success of Mayor Nickels's "mid-course correction" this year that reduced spending and identified new revenues to keep the financial recovery plan on track.
- The fact that City Light's current financial management team has remained in place and is carefully managing the recovery plan.
- City Light's adherence to the City Council's financial policies.
- The utility's resource portfolio that limits exposure to upward price volatility.
- Significant investments by City Light in its hydroelectric generating units to ensure their continued efficient operation.
"The financial crisis for City Light was brought about by an unpredictable sharp drop in water levels to historic lows," Moody's analysis states "While this situation was not unique to Seattle…what was different in 2000-2001 was that the utility had to purchase replacement energy at unprecedented prices."
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Customer Service
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Call (206) 684-3000
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