Fitch Ratings has upgraded to “AA” from “AA-“ bonds issued by the City of Bryan, Texas, on behalf of the Bryan Texas Utilities city electric system.
Specifically, $239.8 million electric system revenue bonds, series 2016, 2017, 2018, 2021, 2021A and 2022, were upgraded to “AA.”
Additionally, Fitch assesses the Standalone Credit Profile at “aa” for the City of Bryan, Texas (City Electric System) and the Rating Outlook is Stable.
The “AA” rating reflects the BTU city electric system's “consistently very strong financial performance over the past few years, even with the disruption of the extraordinary costs incurred during the winter storm in fiscal 2021,” Fitch said.
Fitch expects the trajectory of improving financial performance and leverage to remain below 5.0x through 2028, which supports the higher rating.
The rating further reflects the system's very strong revenue defensibility, as evidenced by very strong customer growth and rate flexibility, and its strong operating risk profile, Fitch said.
The BTU city electric system's operating cost burden is very low as a result of the utility's diversified portfolio of power supply resources, the rating agency noted.
Fitch noted that the Public Utility Commission of Texas is in the process of making decisions that will impact electric market restructuring in the state.
BTU will submit a transmission cost of service filing with the PUCT and also plans to complete an integrated resource plan in 2024.
Fitch expects that the PUCT will finalize its restructuring plan in 2024.
“The changes will then inform BTU's decisions regarding its own needed power supply in 2028, which could potentially include new generation construction. These decisions will affect BTU's financial profile going forward,” Fitch said.
Financial performance has been very strong in recent years, even in fiscal 2021 despite disruptions to key ratios from costs related to the winter storm, Fitch said.
