Fitch Rates NCEMPA $126MM Power System Rfdg Bonds 'BBB+'; Stable Outlook.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. Eastern Municipal Power Agency's (NCEMPA) $126 million power system revenue refunding bonds refunding bond A bond that is issued for the purpose of retiring an outstanding bond. Issuers refund bond issues to reduce financing costs, eliminate covenants, and alter maturities. See also crossover refunding bonds, prerefunding. , series 2005A are rated 'BBB+' by Fitch. NCEMPA's outstanding $2.9 billion parity power system revenue/refunding bonds are affirmed at 'BBB+'. The Rating Outlook is Stable. The 2005A bonds are secured by net revenues of the agency, derived from the ownership and operation of its power system. Proceeds will refund certain of the series 1996B power system revenue bonds. The 2005A bonds, with a final maturity of 2021, are scheduled to price Dec. 13th, with CitiGroup as lead underwriter Lead underwriter The head of a syndicate of financial firms that are sponsoring an initial public offering of securities or a secondary offering of securities. Could also apply to bond issues. . The rating reflects the unenhanced rating, as certain of the bonds are expected to be insured by Ambac, whose financial strength is rated 'AAA' by Fitch. The rating encompasses NCEMPA's solid, take-or-pay contracts with its members and stable financial performance offset by a high average wholesale rate (approximately 7.4 cents per kwh for 2004 including transmission), high member retail rates, and relatively low liquidity. NCEMPA exhausted its rate stabilization reserves in early 2002, as anticipated, and remaining liquidity amounts to roughly 123 days operating cash. While this level of liquidity is low for the rating category, NCEMPA utilizes an energy adjustment 'rider' to quickly pass-through rising fuel costs and help maintain a stable financial position. Leverage is better than average for the rating category, with net debt to funds available for debt service at 8.3 times (x) for fiscal year end 2004. With no new debt issuances projected through at least 2008, the debt burden should continue to decline. Over the past year, NCEMPA has been affected by the rising cost of fossil fuels fossil fuel: see energy, sources of; fuel. fossil fuel Any of a class of materials of biologic origin occurring within the Earth's crust that can be used as a source of energy. Fossil fuels include coal, petroleum, and natural gas. , resulting in an unanticipated 5.1% increase in the energy adjustment rider in May 2005. The continued rise in fossil fuel prices and resulting higher cost of supplemental power purchases for NCEMPA through 2005 have necessitated NCEMPA reviewing the possibility of another rate adjustment in early 2006. Fitch believes NCEMPA will likely maintain their relative rate position going forward given the higher proportion of nuclear power in their fuel mix relative to others in the southeast region. Nonetheless, Fitch will be closely monitoring prospective rate adjustments to assess their impact on the agency's relative position. On a retail basis, the members' rate disadvantage is not as large, particularly for industrial users that have the benefit of economic development rates and load management rate incentives. Other credit positives include: the lack of movement toward electric deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. in North Carolina, the Local Government Commission's (LGC LGC Logistics (Contracting) LGC Local Government Commission LGC La Gloria Cubana (cigar) LGC Laboratory of the Government Chemist (UK) ) fiscal oversight of NC municipalities, sound financial performance of NCEMPA's member cities and solid plant operating performance for the nuclear (Brunswick and Harris) and coal fired (Roxboro and Mayo) generating units. NCEMPA's supplemental power agreement with Progress Energy Corp. (formerly Carolina Power & Light Co.), recently extended through 2017, has helped reduce and stabilize the agency's supplemental power costs. The role of the LGC in North Carolina is unique, monitoring the financial health of all municipalities while providing a strong voice at the state level on behalf of municipal bondholders. Lastly and most notably, the state's even slower pace toward electric deregulation provides NCEMPA more time to pay down its generation debt. NCEMPA is a joint action agency providing power supply to 32 member distribution systems in eastern North Carolina Eastern North Carolina or (often abbreviated as ENC) is the region of North Carolina which includes the eastern third of North Carolina. It includes the Outer and Inner banks, thus it is often known geographically as the state's coastal region. , pursuant to take-or-pay power sales contracts Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. . The member systems provide retail electric service to roughly 246,000 customers, primarily residential and commercial users. 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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