Recent upgrades to Seattle City Light's credit ratings reflect the utility and hydropower project operator's strong financial management strategies.
City Light's credit rating from Standard & Poor's Rating Services increased from AA- to AA with a stable outlook, while Moody's affirmed the company's Aa2 rating with a stable outlook.
"These improved ratings reflect the smart financial decisions Seattle City Light has made on behalf of its customers," Seattle mayor Mike McGinn said. "The new ratings will benefit residents and businesses in our community for years to come.
Both ratings highlight City Light's increased reserves and its reduction of market volatility -- embodied by a six-year strategic plan approved by Seattle's city council in 2012.
The plan guides the company's investments and operations while providing customers with predictable rates, City Light said, with strategies including:
- Reduced reliance on surplus power sales revenue;
- Creation of a rate stabilization fund in 2010 and an associated surcharge mechanism;
- Modest retail rate increase the past two years with adopted increases through 2014; and
- Strong operating revenues to cover interest and principal payments on borrowing 1.8 times over.
Higher credit ratings can reduce City Light's cost of borrowing, which, the utility said, will save it and its customers millions of dollars on large capital projects.
Seattle City Light is the 10th largest public utility in the United States, providing power to nearly one million Seattle-area residents.
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