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Fitch Upgrades Piedmont Municipal Power Agency's (South Carolina) Bonds to 'BBB+'; Outlook Stable

Posted on: Thursday, 24 January 2008, 15:00 CST

Fitch Ratings has upgraded Piedmont Municipal Power Agency's (South Carolina (PMPA)) $1.2 billion of electric revenue bonds to 'BBB+' from 'BBB.' The Rating Outlook is Stable.

PMPA is a joint action agency providing wholesale all-requirements power to 10 cities in northwestern South Carolina. The agency's power supply is primarily derived from an ownership interest in Catawba Nuclear Unit No. 2. The historical 'BBB' rating largely reflects the agency's substantial amount of outstanding debt and financial leverage associated with the nuclear facility, above-average wholesale electric rates and extended debt schedule.

Reasons supporting the rating upgrade to 'BBB+' include the increased value of nuclear power compared with less environmentally friendly fuel sources, consistently good operating performance and favorable production costs of the Catawba and McGuire nuclear stations, which PMPA participates in, and the satisfactory financial performance of PMPA and its member systems. PMPA also has good liquidity, bolstered by a sizeable rate stabilization fund. Service area characteristics remain below average, but continue to improve, aided by solid customer growth and a broadening out of local industries.

Credit risks take into account a degree of plant concentration risk, with PMPA's primary power supply coming from two large, nuclear power stations, with the remainder from contracted supplemental purchases. Wholesale electric rates are still above Duke Energy's, the primary electric supplier in the region, and moderate annual rate increases will be necessary for the foreseeable future. Also, about 30% of the agency's debt is variable rate and the debt maturity schedule is lengthy, extending through 2034.

PMPA serves its communities with wholesale electric power from a 286 megawatt interest in Catawba No. 2 nuclear plant and a small amount of supplemental power purchases. The municipal systems serve a population of over 150,000, with energy growth increasing at about 2.2% per year.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Source: Business Wire

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