Fitch recently affirmed the “AA” ratings on revenue bonds issued by Florida public power utility JEA.
The revenue bonds are approximately:
$854 million outstanding electric system revenue bonds;
$470 million outstanding electric system subordinated revenue bonds;
$25 million bulk power supply system revenue bonds;
$93 million St. Johns River Power Park revenue bonds.
Fitch has assessed the electric system's standalone credit profile at “aa.” The SCP represents the credit profile of the utility on a stand-alone basis, irrespective of its relationship with and the credit quality of the city of Jacksonville (AA/Stable).
The Rating Outlook is Stable.
The “AA” bond ratings and “aa” SCP reflect the JEA electric system's “very strong historical financial performance and very low leverage profile,” Fitch said.
“Strong operating income coupled with a decline in total debt outstanding, which has included an acceleration of early debt retirements/redemptions and rate increases in anticipation of the completion of the new nuclear units at Plant Vogtle, has led to a decline in the leverage ratio.”
The rating “also considers the system's very strong revenue defensibility, which is based on JEA's monopolistic revenue source characteristics, growing service territory and independent rate setting ability,” Fitch said.
JEA's resource base “is evolving with the retirement of coal-fired capacity, the addition of nuclear energy and energy from low-cost solar contracts,” it noted.
“While the cost of power rose significantly in 2022 to about 12 cents/kWh, fuel and purchased energy costs declined in fiscal 2023, which Fitch expects will help stabilize the utility's cost burden closer to historical levels,” Fitch said.
Construction of the new nuclear unit Vogtle Unit 3 in Georgia is complete, and the unit is progressing toward commercial operation with an in-service date projected later this month. Construction of Unit 4 is projected to be completed later this year with potential in-service operation in early 2024, Fitch noted. In 2008, JEA entered into a purchase power agreement with one of the project owners, the Municipal Electric Authority of Georgia (MEAG Power).