DUFF & PHELPS UPGRADES GULF POWER COMPANY FIRST MORTGAGE BONDS TO 'A+'
CHICAGO, Nov. 23 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has raised the ratings for Gulf Power Company as follows: first mortgage bonds and collateralized pollution control revenue bonds to `A+' (Single-A-Plus) from `A'(Single-A); non-collateralized pollution control revenue bonds and preferred stock to `A' (Single-A) from `A-' (Single-A-Minus). Approximately $500 million of securities are affected. Gulf Power has low rates, strong cash flow, an adequate reserve margin, and a healthy service territory economy. Regulation has been reasonable and off-system sales should provide opportunities for increased earnings. Current interest coverage ratios are expected to remain relatively strong over the next several years, and the debt ratio should remain relatively stable. Cost containment measures and lower capital costs have allowed the company to delay rate relief needs. Gulf Power is well-positioned for an increasingly competitive environment. However, the loss of the company's largest industrial customer to an independent power producer in August 1993 demonstrates the growing intensity of competition. Gulf Power's parent, 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 8 percent over a period of years 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- 11/23/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/ (S0)
CO: Gulf Power Company; Southern Company ST: Florida IN: UTI SU: RTG
SH -- NY064 -- 7373 11/23/93 15:40 EST
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|Date:||Nov 23, 1993|
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