Moody’s Investors Service has affirmed its Aa3 rating with a stable outlook on Western Minnesota Municipal Power Agency’s (WMMPA) power supply revenue bonds.
WMMPA’s outstanding power supply revenue bonds are secured by revenues it receives through an agreement with Missouri River Energy Services (MRES), a joint-action agency serving 61 municipal electric systems in the states of Iowa, Minnesota, North Dakota, and South Dakota.
Through the agreement, WMMPA provides financing for and is the owner of electric generation, transmission, and other facilities that are used by MRES to serve its members.
Moody’s positive rating reflects its view of the consolidated credit quality of MRES, along with its history of sound financial policies and the resulting strong debt service coverage, MRES noted on July 7.
“The rating also favorably views the low cost power supply enjoyed by MRES members and the overall credit quality and financial strength of the members,” MRES said in a news release.
The rating considered the steps taken to ensure future capacity and improve resource diversity, which includes the completion of the Red Rock Hydroelectric Project on the Des Moines River near Pella, Iowa, an MRES member community.
Additionally, WMMPA’s financial performance has been mostly unaffected by coronavirus and benefits from significant member and customer diversity that serve to mitigate the potential impact of the coronavirus, MRES said.
Although overall energy sales were lower in March and April due to a combination of coronavirus-related shutdowns and weather conditions, lower power supply expenses have offset the decline in sales.
Moody’s considers the rating outlook as stable, reflecting MRES and WMMPA’s solid financial profile and disciplined reserve policies that provide flexibility to address unexpected operational, construction or market-related issues, MRES said.
The stable outlook also takes into consideration the agency's ability to provide competitive rates without no forecasted rate increases in the foreseeable future.
“We are pleased with the outcome of Moody’s independent review,” said MRES Senior Vice President and CFO Merlin Sawyer. “Our strong financial position and policies, our diverse membership and their financial strength, along with the reputation of WMMPA, MRES, and our members continue to play a key role in maintaining the high financial rating of WMMPA.”