Chugach financial rating upgraded
Fitch Ratings has upgraded Chugach Electric Association’s financial rating to “A” from its previous “A-“. It also provides an outlook of “Stable” for Chugach.
Fitch cited the following four primary factors that contributed to the upgrade:
- Increased clarity of Chugach’s future business performance
- Consistently stable financial results
- A reduced capital spending program
- Constructive regulatory treatment by the Regulatory Commission of Alaska
Additionally, Fitch noted that while Chugach relies heavily on natural gas for generation, two recent events have been positive. One is the State’s effort to develop more long-term supplies of gas. The other is the recent completion of the highly efficient Southcentral Power Project. Fitch also observed that Chugach has managed the risk associated with the loss of two of its wholesale customers. Fitch said its “A” ratings assumes continued favorable rate treatment by the RCA.
The upgrade can lead to lower borrowing costs for future financings. Fitch noted the rating is on implied obligations, since the more than $500 million in existing Chugach debt is secured by privately held, first mortgage bonds.
Chugach is the largest electric utility in Alaska, providing power for Alaskans throughout the Railbelt through retail, wholesale and economy energy sales.