Mike McGinn (former Mayor)
SUBJECT: Standard & Poor's upgrades Seattle City Light's credit rating
5/28/2013 11:39:00 AM
Robert Cruickshank, (206) 849-9584
Standard & Poor's upgrades Seattle City Light's credit rating
Ratings service highlights strong financial management strategies
SEATTLE - Standard & Poor's Rating Services upgraded Seattle City Light's credit rating from AA- to AA with a stable outlook and Moody's affirmed its Aa2 rating with a stable outlook, Mayor Mike McGinn announced today.
"These improved ratings reflect the smart financial decisions Seattle City Light has made on behalf of its customers," McGinn said. "The new ratings will benefit residents and businesses in our community for years to come."
Both ratings services highlighted City Light financial management strategies that have significantly increased reserves, and reduced the impact of electricity market volatility.
City Light's recent strategies are embodied in a six-year strategic plan approved by the City Council in 2012. The plan guides the utility's investments and operations while providing customers with predictable rates that remain among the lowest in the country. Key strategies include:
- Reduced reliance on surplus power sales revenue.
- Creation of a rate stabilization fund in 2010 and an associated surcharge mechanism.
- Modest retail rate increases the past two years with adopted increases through 2014.
- Strong operating revenues to cover interest and principal payments on borrowing 1.8 times over.
"Smart management starts with sound financial practices supporting reinvestment in order to protect an organization's critical assets," Councilmember Mike O'Brien said. "That's what Seattle City Light is doing - ensuring reliable, affordable, environmentally sensitive power for our community for years to come. We see it every day and the ratings services recognize it too."
Higher ratings reduce the cost of borrowing, which will save the utility and its customer-owners millions of dollars on large capital projects, such as the planned Denny Substation or transmission line relocations for replacement of the Alaskan Way Viaduct.
"I am grateful for the leadership of Mayor McGinn and the City Council, and particularly thankful to the citizens who volunteered to serve on the Seattle City Light Review Panel in order to make our strategic plan a reality," Superintendent Jorge Carrasco said. "The ratings upgrades demonstrate how that plan is already paying dividends for our customers."
Seattle City Light is the 10th largest public electric utility in the United States. It has some of the lowest cost customer rates of any urban utility, providing reliable, renewable and environmentally responsible power to nearly 1 million Seattle area residents. City Light has been greenhouse gas neutral since 2005, the first electric utility in the nation to achieve that distinction.