Reflecting Seattle City Light’s improving finances, Standard and Poor’s (S&P) and Moody’s bond rating agencies have reaffirmed the utility’s investment-grade credit ratings of A+ and Aa3, respectively, in anticipation of the utility issuing $60.4 million in revenue refunding bonds for the Lucky Peak Hydroelectric Project.
While the bonds will actually be issued by the Boise-Kuna Irrigation District in Idaho, City Light has contracted to purchase all of the power from the Lucky Peak Project and to pay all of the project's costs, including debt service on bonds issued to finance the project. The refunding will provide savings of more than $4 million to City Light over the remaining life of the bonds.
About City Light, Standard and Poor’s said: “The “A+” rating continues to reflect the following underlying credit strengths: competitive rates even following the approved increases because of Seattle’s very low rates before the crisis, and a strong local economy (Seattle triple-‘A’) with stable load growth, despite the economic slowdown.”
"This is confirmation from the financial community that City Light's finances have stabilized and we're on the right track," said Seattle Mayor Greg Nickels. "While many western utilities have seen their credit ratings fall below investment status, we've taken the necessary steps to recovery. We’re holding the line on rates and we’re making progress to begin rolling back rates beginning in 2004.
Other improvements noted by both agencies are City Light's financial recovery plan and new financial policies; the utility’s progress made thus far in financial recovery; the limitations now on the utility's wholesale energy market exposure; and the fundamental strength of the utility’s average cost structure.
The two rating agencies recognized the importance of the City Council’s oversight and the effectiveness of City Light’s management of the financial impacts of high wholesale prices in 2000 and 2001.
City Light kept its investment-grade ratings even though the utility’s debt ratios have increased significantly from previous years. The two rating agencies provide analysis and information about bonds and preferred stock to the financial community to help them determine value in the marketplace.