--Issuer Default Rating (IDR) at 'A';
--Senior Secured Debt at 'A+';
--Senior Unsecured Debt at 'A';
--Short-term IDR at 'F1'.
The Rating Outlook is Stable. Approximately
KEY RATING DRIVERS
--The essential role and services performed by SPP in managing and planning system reliability, lowering costs, and advancing energy policy;
--The predictability and sustainability of cash flows derived from regulated tariffs and service contracts;
--The relatively low business risk of its transmission operations;
--The solid investment-grade credit worthiness of its members;
--A supportive federal regulatory environment at the
SPP operates under FERC-approved Open Access Transmission Tariffs (OATT) that provide for the full recovery of all costs including scheduling, transmission and monitoring activities. Fitch's expectation is that the FERC will permit tariffs as necessary to recover SPP's operating costs, as has been the case historically.
New Day Ahead Energy Market: SPP's new integrated energy market went live in March and includes a real time balancing market, a day-ahead market with congestion hedging, and a related operating reserves market to increase market efficiencies and lower power costs for respective members. The new integrated market will help incorporate renewable generation. SPP projects these markets to generate up to
New members to join SPP in 2015: The Integrated System (IS), a high-voltage transmission grid in the upper Great Plains region of the U.S., comprised of The
The voluntary nature of SPP's membership represents a modest credit concern. Transmission services costs, which are largely fixed costs, would be borne by the remaining members, on a pro rata basis, should an SPP member leave. However, the risk of departure of a member is mitigated by the requirement that the exiting member must pay a fee equal to its share of SPP's outstanding debt and other committed expenses as an 'exit charge'. Similarly, SPP's exposure to a market participant's payment default is minimized by the collateral requirements as well as bylaws that allow for costs of the default to be spread among the remaining market participants.
SPP's current liquidity position is sufficient with
SPP's capital expenditures are forecasted to approximate
SPP is focused on improving transmission reliability by undertaking an integrated approach with members to identify new transmission projects. Investment in these projects is the responsibility of its members and therefore not a credit concern for SPP, since it is not responsible for funding the new transmission projects. In 2013, SPP members completed 101 transmission expansion projects totaling
Going forward, SPP has identified the need for significant transmission upgrades within their service area totaling approximately
Positive Rating Action: No positive rating actions are expected at this time.
Negative Rating Action: An unexpected change in the rate design of the FERC-approved OATT tariff, a cybersecurity event, or a large departure of members from SPP's service territory could trigger negative rating actions.
Additional information is available at 'www.fitchratings.com'.
--'Rating U.S. Utilities, Power and Gas Companies (
--'Corporate Rating Methodology'(
--'Parent and Subsidiary Rating Linkage' (
Rating U.S. Utilities, Power and Gas Companies (Sector Credit Factors)
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Parent and Subsidiary Rating Linkage Fitch's Approach to Rating Entities within a Corporate Group Structure
Source: Fitch Ratings
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