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Subject:   Moody's, S&P upgrade City Light's financial outlook
For Immediate Release:   
12/13/2004  3:30:00 PM
For More Information Contact:
Michael vanDyck, 684-8347
Scott Thomsen  (206) 386-4233

Moodys, S&P upgrade City Lights financial outlook
Rating agencies cite utilitys financial progress, resiliency

SEATTLE- Two credit-rating agencies have boosted the financial outlook for Seattle City Light and affirmed their ratings for the utility, Seattle Mayor Greg Nickels announced today.

Standard & Poors affirmed its A rating and bumped up its outlook for City Light two notches, from negative to positive. Moodys Investor Services affirmed City Lights Aa3 credit rating and upgraded the utilitys outlook from negative to stable. Both ratings apply to existing debt, as well as $58.6 million of new financing for capital improvements and up to $230 million of debt refinancing.

This is excellent news, Seattle Mayor Greg Nickels said. Our goal has been to stabilize City Light in the wake of the energy crisis, for the long-term benefit of its ratepayers. These ratings affirm that were on the right financial course.

The City Council has been encouraged by City Lights improving financial situation, said Jean Godden, chair of the councils Energy and Environmental Policy Committee. This is another indication of that improvement.

Were pleased that both Moodys and S&P have acknowledged our progress, said City Light Superintendent Jorge Carrasco. One of the priorities I set when I joined the utility this year was to create financial stability and flexibility. Were getting there.

Since the 2000-2001 energy crisis, City Light has paid off all short-term debt associated with higher power costs, acquired enough resources to be surplus in almost every month, even in dry years, adopted new, more conservative financial policies, and built up its operating cash reserves to cover short-term variation in its cash flow. Rates have remained stable. The two rating agencies cited similar reasons for their actions.

S&P said its rating reflects Seattle City Lights fundamental credit strengths, improved financial position, and full recovery of deferred power costs incurred in 2001. The agency noted that in 2004, City Light met its objective of retiring its short-term debt (and) rebuilding cash reserves to adequate levels

Moodys said that the change from a negative to a stable credit outlook reflects that Seattle City Light has emerged from a period of financial stress, demonstrating in the process its financial resiliency. Moodys credited City Light for adopting and adhering to a decisive financial plan for recovery from the energy crisis of 2000-2001. In 2004, all short-term debt had been repaid and operating reserves were built back up to better protect against a certain level of risk exposure.

The credit outlook has been changed to stable from negative given the progress the utility has achieved in restoring its financial health, Moodys said.

Standard & Poors said its rating reflects the following strengths:

  • The Citys ability to establish rates for its electric utility;
  • Strong support by the City to stabilize and rebuild City Lights financial position;
  • Stronger financial policies and planning assumptions that reduce the utilitys market exposure and risk;
  • Strong debt service coverage;
  • Renewed load growth in 2004.

According to Moodys, City Lights credit strengths include:

  • Ownership of low-cost hydroelectric generation;
  • Willingness to raise retail rates to insure financial position;
  • Retail rates that remain below national averages and competitive with regional averages;
  • Access to the City of Seattles strong cash pool;
  • Recognition of the need for strong financial policies.

For more information, visit the mayors web site at www.seattle.gov/mayor. Get the mayor's inside view on initiatives to promote transportation, public safety, economic opportunity and healthy communities by signing up for The Nickels Newsletter at www.seattle.gov/mayor/newsletter_signup.htm.

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