FOR IMMEDIATE RELEASE
July 23, 2014
Contact: Mike Kanarick
802.735.7962
Moody’s Investors Service Improves BED’s Credit Rating Outlook
BED Improves Power Supply Diversity and Debt Service Coverage Ratios
Burlington, VT – Moody’s Investors Service yesterday published a Ratings Report, in which Moody’s improved Burlington Electric Department’s credit rating outlook to Baa2 positive from Baa2 stable. This boost comes only seven months after Moody’s improved BED’s outlook from negative to stable.
The Moody’s report includes the following summary explaining the outlook improvement: “The outlook change to positive from stable reflects our belief that the department will continue to reduce its exposure to the power supply market through long term contracts and diversify the power supply portfolio through the acquisition of the Winooski hydro facility. The outlook change also reflects our expectation of stable or improving debt service coverage ratios and other financial metrics.”
“This is very impressive news and shows a continuation of a positive trend,” said Mayor Weinberger. “This upgrade is consistent with the outlook improvements Moody’s recently announced for the Airport and the City. It is satisfying to see that the Administration’s and City Council’s sustained focus on restoring Burlington’s finances is securing steady gains.”
“Mayor Weinberger and BED’s leadership team and Commission deserve credit for keeping a sharp focus on improving the utility's financial position,” said Neale Lunderville, BED interim general manager. “Improvements like this will help BED secure lower interest rates and reduce pressure on electric rates. Strong financial management is part of BED’s continued commitment to the customers we serve.”
The report also summarizes the Baa2 rating rationale: “The Baa2 rating reflects the department’s strength as the exclusive provider of electric service to the city as well as its stable customer base which includes the University of Vermont. The Baa2 also reflects rates which are regulated by the state public service board (PSB), exposing the department to regulatory lag risk, which is unusual for public power utilities that generally benefit from local rate setting authority. The PSB has approved all department rate requests for the last two decades, evidencing a supportive regulatory regime. The rating also reflects the department's improved power supply diversity and debt service coverage ratios (DSCR) in recent years.”
*Moody’s Investors Service BED Ratings Report attached.
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