2009-11-10 19:59:01 -
Fitch Ratings has assigned 'AA-' ratings to the following JEA fixed-rate electric system and subordinated electric system revenue bonds.
--$45.955 million electric system revenue bonds series three 2009 D (taxable Build America Bonds [BABs]);
--$69.885 million subordinated revenue bonds, 2009 series F (BABs);
--$56.285 million subordinated revenue refunding bonds, 2009 series G (tax exempt).
The bonds are expected to price
the week of Nov. 16, 2009. Proceeds from the series three 2009D and subordinated 2009 series F BABs will be used to finance a portion of JEA's ongoing capital improvement program.
Depending on market conditions, the subordinated 2009 series G bonds will refund outstanding subordinated bonds for savings.
In addition, Fitch has affirmed the following outstanding JEA ratings.
--Senior electric system revenue bonds at 'AA-';
--Subordinated electric system revenue bonds at 'AA-';
--St. John's River Power Park bonds at 'AA-';
--Bulk Power Supply System Scherer 4 Project revenue bonds at 'AA-';
--Series C tax-exempt commercial paper notes at 'F1+'.
The Rating Outlook is Stable.
Support for the 'AA-' rating and the Stable Outlook reflect JEA's above average credit characteristics, including.
--Strong management practices;
--Efficient generating portfolio;
--Competitive retail electric rates;
--Diverse customer base;
--Solid financial performance and liquidity.
The following credit drivers could affect JEA's rating.
While electric usage was down in 2008 and 2009, JEA's financial performance improved as a result of the base rate increase and fuel adjustment increase imposed in 2008. JEA appears to be weathering the economic downturn and while still unaudited, the electric system is reporting debt service coverage of 2.99 times (x) in 2009 compared to 2.40x in 2008. In addition, liquidity levels have also improved and while still unaudited, JEA is reporting 62 days cash on hand and 108 days liquidity on hand for fiscal year end Sept. 30, 2009, compared to 33 days cash on hand and 52 days liquidity on hand for fiscal year end Sept. 30, 2008. The maintenance of financial metrics consistent with the 'AA-' rating will continue to be monitored by Fitch.
JEA also appears to have some flexibility in its capital improvement program. As a result of declining load usage, the capital improvement plan has been scaled back by approximately $600 million as the combined cycle conversion project is deferred until after 2014. The successful implementation of its still sizable $1.3 billion capital plan that will be funded from a balance of debt and cash will continue to be a key driver.
In response to its need to diversify fuel mix and in light of potential climate legislation, JEA has entered into a Power Purchase Agreement with MEAG power which will entitle JEA to 103 MW of capacity and related energy from each of the Additional Vogtle Nuclear Units for a 20-year term, commencing on the operational dates of each of the units (2016 for Unit #3 and 2017 for Unit #4). JEA will be required to pay for such capacity and energy on a 'take-or-pay' basis. MEAG Power's estimated in-service cost for its 22.7% (or 500.3MW) share of the additional Vogtle nuclear units is $3.596 billion. JEA's allocation is approximately $1.443 billion of MEAG Power's project costs. In order to finance a portion of its costs of acquisition and construction of the Additional Vogtle Nuclear Units, in April 2009, MEAG Power issued $200.9 million of bond anticipation notes maturing in May, 2010. In the event that MEAG Power does not have sufficient funds to pay the Power Purchase Agreement (PPA) notes when due, then JEA will be obligated to pay to MEAG Power 50% of the amount of any shortfall.
JEA is an integrated utility providing electric and water service within the city of Jacksonville, FL, and surrounding portions of three neighboring counties. JEA serves over 417,000 electric customers and is one of the largest public power systems in the United States, with 3,300 megawatt (MW) of net generating capacity.
For a full review of the credit profile of JEA's electric system, please see Fitch's Jan. 16, 2009 report titled 'JEA (FL) Electric Utility System' available on the Fitch web site at ' www.fitchratings.com :
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Additional information is available at ' www.fitchratings.com :
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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 RatingsChris Jumper, +1-212-908-0594Karl Pfeil, III
+1-212-908-0516 (New York)Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com : mailto:cindy.stoller@fitchratings.com
