$113 million offering shores up utility’s finances, protecting its rating
By Christine Pratt
World staff writer
EAST WENATCHEE — Douglas County PUD will sell $113 million in revenue bonds today to refinance old debt and modernize Wells Dam.
PUD General Manager Bill Dobbins said $100 million will be used to rehabilitate the Columbia River dam’s 10 turbine/generators.
Rehabilitated turbines generate more electricity with the same amount of water.
The remaining $13 million will refinance outstanding debt.
Debt-rating agency Standard & Poor’s maintained the utility’s "AA stable” rating on the new bonds. This rating means that agency analysts think the PUD has a "very strong capacity to meet financial commitments.”
Moody’s also maintained its "Aa stable” rating of PUD debt, but downgraded it slightly from the former Aa2 to Aa3.
The firm’s analysts attributed the downgrade to two consecutive years of drought, recessionary low market prices for surplus electricity and resulting decline in cash reserves.
Dobbins said the firm also changed its rating criteria by evaluating the debt based on the combined performance of the dam and electricity system. Both were evaluated separately in past debt evaluations.
Debt with an Aa rating from Moody’s is also judged to be "high quality” and "subject to very low credit risk,” according to its website.
A good debt rating can save the utility millions of dollars in financing costs. The better the rating, the lower the debt cost.
The low water and pricing conditions and the resulting dip in reserves cited in the Moody’s report have also affected the Chelan and Grant County PUDs.
The company downgraded Grant PUD debt from "Aa” to "Aa-” late last spring. It added a "negative outlook” to Chelan County PUD’s Aa rating.
Douglas County PUD is the smallest of the region’s three dam-operating utilities and arguably the leanest. At about 2 cents per kilowatt hour, its power rates are thought to be the lowest in the nation.
"Douglas PUD’s rating continues to be supported by the district’s ownership of or access to highly competitive hydro generation, low retail rates and relatively strong liquidity albeit at a lower level,” the Moody’s rating report says.
Christine Pratt: 665-1173