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Subject:   Mayor announces Seattle City Light bond rating increase to A+
For Immediate Release:   
9/7/2006  4:00:00 PM
For More Information Contact:
Suzanne Hartman (206) 615-0050

Mayor announces Seattle City Light bond rating increase to A+
More good news for City Light as bond agency
sees improved financial performance

SEATTLE- Mayor Greg Nickels announced today that Standard & Poor (S&P) has upgraded Seattle City Light’s bond rating from A to A+, stable outlook. The higher rating is good news for ratepayers and an independent vote of confidence in the direction of City Light.

“Higher bond rating means lower interest rates, and that saves money for the utility and, ultimately, the rate payers,” Nickels said. “This is a great step forward for City Light and a tremendous validation of the financial management changes made under City Light Superintendent Jorge Carrasco over the past two years.”

Nickels recently proposed the largest rate cut in 35 year based on the utilities’ stronger financial position.

The bond rating for City Light was reduced several times after the on-set of the West Coast energy crisis in 2000. In January 2001, City Light received an AA-/Negative rating. By July, 2003, the rating had dropped to A/Negative. The turnaround began in December, 2004 with an A/Positive rating and has continued to climb to today’s rating announcement

Today’s action by S&P is recognition that the utility is in stronger financial condition. The raised rating is based on the city’s adoption of strong financial policies and continued financial improvement as evidenced by its lower debt leverage, strong cash flow coverage, and strong liquidity.

“Seattle City Light’s improved financial metrics and rate-setting policies were the basis for the raised rating,” said Standard & Poor's credit analyst Leo Carrillo. “The paramount rating factor remains Seattle’s willingness to adjust rates to support financial strength, which the city has demonstrated convincingly since implementing very large rate increases in 2001.”

“We are delighted with S&P’s endorsement of the measures we’ve adopted that have produced convincing financial results,” added Superintendent Jorge Carrasco. “Our goal has been to get costs under control, to stop relying on borrowing to keep rates low and to develop a risk management strategy that produces higher wholesale revenues. We intend to provide Seattle ratepayers with the best customer service and best performing utility in the country. Through the hard work of our employees, we have taken major steps in the right direction.”

City Light hasn’t borrowed money since 2004 and isn’t forecast to borrow funds until late 2008. When the utility does seek funds for planned capital expenditures, it will be in a more favorable position. In the next two years, the utility plans to pay-down its long-term debt by an additional $100 million, improving its borrowing capability.

City Light’s proposed 4.8% rate decreased is currently under consideration by the Seattle City Council. A public hearing is scheduled for October 9th at 5:30 p.m. in Council Chambers. For more information on the Council’s rate review process please see http://www.seattle.gov/council/issues/rates.htm

Please visit the mayor’s web site at www.seattle.gov/mayor. Get the mayor’s inside view on efforts 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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