Correction - Fitch Affirms Farmington, New Mexico's Utility System Revs at 'A+'.SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- (This is a correction for a press release that was published November 17, 2006. It updates the amount of outstanding debt in the third paragraph.) Fitch affirms its 'A+' rating on the City of Farmington, New Mexico's utility system revenue bonds, series 2002A. The Rating Outlook is Stable. The $36.85 million in Series 2002A bonds outstanding represent the only utility revenue bonds Utility revenue bond A municipal bond issued to finance the construction of public utility services. These bonds are repaid from the operating revenues the project produces after the utility is finished. outstanding. Bonds are secured by a net revenue pledge Net Revenue Pledge A provision in a municipal bond issue that requires the issuing municipality to use net revenues (revenues left after expenses) from the project being financed to pay first the debt service costs of the issue. of the electric, water and wastewater systems. The 'A+ rating reflects the combined utility's competitive resource mix, strong generation of cash flow sufficient to fund major capital needs, and a conservative management philosophy. In addition, the rating reflects the strength of the combined revenue pledge of three utility systems: electric, water and wastewater, although the majority of revenues (87%) are provided by the electric system. Over the last three years management has funded a number of improvements from ongoing revenues, including transmission upgrades to improve reliability and redundancy and the construction of the 60MW Bluffview Power Plant, a combined cycle A combined cycle is characteristic of a power producing engine or plant that employs more than one thermodynamic cycle. Heat engines are only able to use a portion of the energy their fuel generates (usually less than 50%). The remaining heat from combustion is generally wasted. natural-gas fired power plant placed into commercial operation in May 2005. The Bluffview Power Plant replaced previous purchased power and is expected to provide ongoing cost stability when coupled with the utility's long-term, fixed-price natural gas contract through 2020. Prior to 2002, the utility used its cash flow to defease approximately $81.5 million of outstanding debt in preparation for the implementation of a deregulated retail electric market. The utility's debt load is modest with very little debt ($36.85 million with a final maturity in 2013) although competitive pressure has declined since the State of New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). indefinitely postponed the implementation of a deregulated retail electric market. As a result of the utility's efforts to reduce fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). and use excess cash flow to invest in the system, debt service coverage levels have been over 4 times (x) in the past five years. The utility has an equity to capitalization ratio of 83%. Liquidity is strong with an unaudited cash balance at the end of fiscal year 2006 of $25 million, or approximately 141 days operating cash. Credit risks include customer and industry concentration, with the local economy heavily reliant on energy businesses, and below average economic indicators Economic indicators The key statistics of the economy that reveal the direction the economy is heading in; for example, the unemployment rate and the inflation rate. . The top six industrial customers account for approximately 36% of revenues and are all related to the natural gas and oil industries. The largest customer accounts for 22% of electric revenues. While Farmington has below-average wealth levels and an above average unemployment rate, its low cost of living has attracted residential development in the last decade. The city continues to grow in its role as the regional retail, health and education center for the northwest corner of New Mexico. The City of Farmington's utility system is a combined utility system located in the northwest corner of New Mexico, providing electric, water, and wastewater services to the city of Farmington and surrounding area. Operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. for fiscal 2005 totaled $103.2 million, comprised of 87% electrical, 8% water, and 5% wastewater. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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