Standard & Poor’s (S&P) has affirmed its “AA+” long-term rating on City Utilities of Springfield’s outstanding revenue bonds and also affirmed it “AA” long-term rating on CU’s outstanding certificates of participation, the Missouri public power utility said on Jan. 10.
S&P said the “AA+” rating reflects its opinion of CU's “very strong enterprise risk profile and extremely strong financial risk profile.”
The rating agency said the very strong enterprise risk profile “reflects our view of CU's large customer base with significant revenue from residential accounts, competitive electric rates, and a diverse resource portfolio. Importantly, CU has excellent management, policies, and planning.”
More specifically, S&P said that the enterprise risk profile reflects its view of CU's very strong operational management assessment, highlighted by CU's obtaining electricity from owned generation sources, as well as purchases from the Southwest Power Pool Integrated Marketplace and purchased power contracts with several renewable energy providers.
CU produces five-year financial forecasts, five-year capital improvement plans, and has written policies on topics including natural gas hedging and rate policy standards, the rating agency noted.
The enterprise risk profile also reflects its view of CU's “very strong market position, with CU's weighted average revenue per kilowatt-hour about 90% of the state's average, which allows for rate raising flexibility,” as well as the utility’s “extremely strong industry risk relative to other industries and sectors.”
S&P said that the extremely strong financial risk profile reflects its view of robust fixed-charge coverage, liquidity of more than 200 days when including funds in CU's designated improvement account, and a low debt-to-capitalization ratio.