Fitch Rates Colorado Springs Utilities System's (Colorado) $25M Rfdg Revs 2007C 'AA'; Outlook Stable
Source: Business Wire
Colorado Springs Utilities System (CSU) is one of Fitch's highest rated public power entities. The 'AA' rating reflects the CSU's diverse revenue stream as a combined utility system with four major business segments (electric, natural gas, water and wastewater), competitive retail rates, solid financial performance, and a vibrant service area economy. In addition, CSU's rating is further supported by its low-cost power supply portfolio, which includes mostly reliable coal-fired generation (nearly 70% of total energy sold), plus long-term hydropower and natural gas purchases. CSU's management has also developed solid business practices particularly in the areas of capital planning, management succession and risk assessment.
Credit risks center on the combined utilities' substantial capital improvement program (estimated at $1.7 billion for 2008-2012), which will essentially double the utilities' system debt obligations. A key component of CSU's rating is the ability to implement planned rate increases (rate increases require City Council approval) in a timely manner, in order to maintain historical margins and liquidity. For fiscal year end 2006, debt service coverage is a healthy 2.45x (or 1.82x excluding contributions in aid of construction which will vary with customer growth). Liquidity is solid at 145 days operating liquidity, in-line with the Fitch medians for 'AA' rated self-generating public power utilities. Going forward, with reasonably projected load growth and moderate planned rate increases, CSU should maintain debt service coverage of approximately 2.0x (including capital aid), which is consistent with comparable utilities in the 'AA' rating category.
CSU is a combined utility system serving customers in the city of Colorado Springs and surrounding suburban communities. Revenues consist of a mix of electric (45%), natural gas (29%), water (12%), wastewater (7%), and other sources (7%). CSU is owned by the City of Colorado and constitutes an enterprise fund of the City.
More information on the City of Colorado Springs' recently issued 2007A variable rate bonds (rated by Fitch on Aug. 29, 2007) or 2007B variable rate bonds (rated by Fitch on Sept. 21, 2007), is available on the Fitch Ratings web site www.fitchratings.com.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contact:
Fitch Ratings, New York
Lina Santoro, 212-908-0522
Alan Spen, 212-908-0594
or
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Cindy Stoller, 212-908-0526
