Fitch Ratings affirms its 'A-' rating assigned to The Rating Outlook is Stable.
The bonds are secured by net revenues of PMPA, derived primarily from power sales contracts with its member cities.
KEY RATING DRIVERS
STRONG TAKE-OR-PAY CONTRACTS: The rating is supported by strong take-or-pay power sales contracts, including a 25 percent step-up provision, between PMPA and its member cities. The agency's costs (including debt service) are paid as an operating expense of the member's electric systems. Favorably, the contracts expire in 2035 while PMPA's current debt matures in 2033.
REDUCED DEPENDENCE ON RATE STABILIZATION FUND: PMPA's 6.7 percent rate increase implemented in
STABLE PARTICIPANTS: PMPA's participants have a stable and moderately growing customer base consisting of mainly residential and small commercial customers. Although unemployment and income metrics are slightly weaker than national averages, they are consistent with historical trends.
CATAWBA PERFORMANCE: The rating also reflects the superior operating performance of the Catawba nuclear Unit No. 2, PMPA's primary power source. While this exposes PMPA to single unit risk, the reliability exchange agreement between Duke's Catawba and
DEBT STRUCTURE: PMPA continues to reduce its variable rate debt obligations. Approximately 15 percent of PMPA's total debt consists of variable-rate obligations, compared to 25 percent in 2011. After excluding variable rate debt that has been swapped out to a fixed rate, PMPA's variable rate obligations are only about 10 percent of total debt.
MAINTENANCE OF FINANCIAL PERFORMANCE: It is important for PMPA to implement and maintain projected rate adjustments through 2014 in order to sustain its improved financial profile.
PMPA is a public agency organized under the laws of the state of
PMPA has a 25 percent undivided ownership in the Catawba nuclear unit No. 2. The Catawba nuclear station is operated by
PMPA is in the midst of implementing a series of annual rate adjustments which have effectively closed the historical gap between the agency's embedded costs and rates. The most recent cost projections indicate wholesale rate increases of approximately 6.7 percent per year through 2014 followed by a 4.0 percent increase in 2015. This will enable PMPA to continue fully recovering operating costs via operating cash flow, extend the life of the RSF to 2033, and provide greater flexibility for the agency to meet ongoing debt service.
fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=696027U.S. fitchratings.com/creditdesk/ reports/report_frame.cfm?rpt_id=636311
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Fitch Ratings affirms its 'A-' rating assigned to
The Rating Outlook is Stable.