Fitch affirms 'A' rating for Brownsville PUB bonds
Fitch affirms the 'A' rating on Brownsville Public Utilities Board (PUB), TX's outstanding $146 million priority revenue bonds.
NEW YORK--(BUSINESS WIRE)--Jan. 12, 2001--Fitch affirms the 'A' rating on Brownsville Public Utilities Board (PUB), TX's outstanding $146 million priority revenue bonds.
The strong rating reflects a management strategy focused on strengthening the electric utility's competitive position by paying down generation debt, securing future water rights and conserving water usage, and contributing significantly to the economic development of the city.
Fundamental credit strengths include low cost power resources, competitive retail rates, and the city's growing economy. PUB's financial performance continues to improve with 2000 results (unaudited) posting debt service coverage of 2.05 times (x), an equity to capitalization ratio of 40.3%, and solid cash on hand covering about 100 days of operating expenditures.
In addition, to meet strong energy and demand growth PUB purchased a 21.472% or 105 megawatt (mw) equity ownership in the new Calpine/Hidalgo natural gas fired combined cycle power plant (500 megawatt). The new resource is very efficient with a heat rate of about 7000 British Thermal Units per kWh, and provides PUB with added resource planning flexibility.
Credit risks include the electric system's exposure to natural gas price volatility (about 60% of PUB's energy supply), and increasing competitive pressures resulting from the growth in alternative power suppliers within the valley. Additional concerns include Brownsville's economic tie to Mexico, the city's low wealth indicators, and increasing capital requirements due to the system's high growth rate.
PUB is a combined utility system providing electric, water, and wastewater services to the City of Brownsville, TX. Operating revenues for 1998 were $83 million and are comprised of 69% electric, 16% water, 13% wastewater, and 2% other.