News Column

Fitch: Rate Hikes Likely to Continue for Florida's Public Water Utilities

May 29, 2014



NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: Peer Review: Florida Water and Sewer Credits (Strong Financial Metrics, Well-Managed Operations But Ongoing Regulatory Concerns)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=748420

Florida residents will likely continue to see water rate increases in the coming years, despite the already-steady incline seen since the state's housing boom, says Fitch Ratings.

However, as Florida's average monthly residential bill for combined service approaches Fitch's affordability marker of 2% of median household income, utilities may see increased political pressure around future rate hikes.

'For many water utilities, Florida's rapid housing expansion led to the expansion of water and sewer infrastructure and the debt to finance it,' says Andrew DeStefano, Director. 'When you build it and they don't come, rate hikes become necessary to finance existing debt with a smaller population.'

While utilities' financial results have improved with the economy, rate hikes will likely continue as they face increased spending from tighter regulations on wastewater effluent disposal and water quality, longer-term water supply needs, and from ongoing repairs and maintenance.

Regionally, expectations for future development, as well as climactic, geographic and ecological nuances, present different challenges for Florida utilities over the long term.

Overall, Florida's water and sewer utility ratings remain strong, and have benefitted from improving economic conditions, stable customer demand trends and sound management.

While rising affordability concerns are unlikely to lead to negative rating actions over the short term, a utility's ability to adopt and implement rate increases may become more limited over time, potentially affecting ratings over the longer term.

The full report 'Peer Review: Florida Water and Sewer Credits', is available at www.fitchratings.com or by clicking the link above.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings, Inc.

Andrew DeStefano, +1-212-908-0284

Director

Fitch Ratings, Inc.

33 Whitehall Street

New York, NY 10004

or

Media Relations

Elizabeth Fogerty, +1-212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


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