Fitch Ratings affirmed ratings on Snohomish County Public Utility District No. 1 bonds at 'AA-'. The Rating Outlook is Stable.
Fitch affirmed the AA- ratings on:
- $363.93 million electric system revenue bonds series 2010A, 2015, and 2020A, 2021A;
- $62.53 million generation system revenue bonds series 2010B, 2015 and 2020A;
- Long-Term Issuer Default Rating
“The affirmation of the 'AA-' rating reflects the district's very strong financial profile in relation to a very low operating cost burden and strong revenue defensibility. The revenue defensibility is anchored by the independent ability to adjust retail electric rates as necessary and very strong service area characteristics,” Fitch said.
Financial performance in 2022 was strong, as the district increased both retail and wholesale MWh sales year-over-year and had the highest total sales volume and largest net margin over the past five years.
Leverage (measured by net debt to net adjusted funds available for debt service) increased to 5.2x in 2022 from 4.8x in 2020 due to additional issuances of debt, but it remains very low and supportive of the current rating.
The rating incorporates a degree of financial variability resulting from attributes associated with a hydroelectric system exposed to wholesale sales that may vary significantly based on hydrology and market energy prices.
The district purchases the majority of its energy supply from the Bonneville Power Administration. While very favorably priced, this exposes the district to hydrology risk and a variable energy supply.
The electric system revenue bonds are secured by electric system revenues, subject to the prior payments of operating expenses of the electric system (including generation system power costs).
The generation system revenue bonds are payable from and secured solely by generation system revenue, which consist almost entirely of payments made by the electric system.