DUFF & PHELPS: GULF POWER COMPANY $60 MILLION FIRST MORTGAGE BONDS RATED 'A'
CHICAGO, July 14 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `A' (Single-A) to Gulf Power Company's issuance of $60 million of first mortgage bonds. The bonds were issued in two parts consisting of $30 million of 5 percent bonds due 1998 and $30 million 6.125 percent bonds due 2003. Proceeds will be used primarily to redeem outstanding first mortgage. Current interest coverage ratios should be sustainable over the next several years, with the debt ratio relatively constant. Construction expenditures are higher than in past years, but cash flow should be in excess of cash construction requirements. Off-system sales will provide opportunities to increase earnings. Regulatory support will be necessary to maintain Gulf Power's credit profile long-term. Cost containment measures and lower capital costs may delay rate relief needs temporarily. The Federal Energy Regulatory Commission (FERC) staff's appeal regarding return on equity on certain wholesale rate schedules is pending before the FERC. A previous order from a FERC administrative law judge recommended that there be no change in the contracts and that the FERC staff had failed to prove that the contracts were not in the public interest. Gulf Power's parent, The Southern Company, has developed a system- wide compliance plan for the Clean Air Act (CAA). Gulf Power, with a virtually all coal fuel mix, has a proportionately high exposure to the CAA requirements relative to other Southern Company system companies. An estimated increase in revenue requirements of up to eight percent could be necessary. Positively, legislation establishing an Environmental Recovery Clause providing for recovery of environmentally related compliance costs has been signed by Florida's Governor. The regulations implementing the clause still must be formulated by the Florida Public Service Commission. Gulf Power, a wholly owned subsidiary of Southern Company, provides electric service in a 7,400 square mile area of northwestern Florida. -0- 7/14/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/ (SO)
CO: Gulf Power Company ST: Florida IN: UTI SU: RTG
WB-MG -- NY086 -- 1609 07/14/93 16:47 EDT
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|Date:||Jul 14, 1993|
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