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NEVADA POWER FIRST MORTGAGE BONDS, PREFERRED LOWERED TO 'BBB' BY FITCH -- FITCH FINANCIAL WIRE --

NEVADA POWER FIRST MORTGAGE BONDS, PREFERRED LOWERED TO 'BBB' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Aug. 18 /PRNewswire/ -- Nevada Power Co.'s $50 million first mortgage bonds and $39.9 million preferred stock are reduced to 'BBB' from 'A-' by Fitch. The credit trend is improving.
 The lower ratings reflect deterioration in financial protection measurements over the past several years and the expectation that credit quality, while improving, will remain under pressure at least through 1996. Bolstered by a recent favorable rate order, pretax interest coverage is expected to improve to and remain in the area of 2.8 times(x) to 3.0x within two years including capitalized leases.
 Nevada Power, one of the fastest growing electric utilities in the country, is in the midst of a significantly expanded construction program to meet the energy needs of its service territory. Capital outlays increased from $48 million in 1987 to $146 million in 1991 and are expected to average close to $200 million per year over the five years 1992-1996. Internally generated cash will fund an average of less than 30 percent of capital outlays. The program includes major power lines, which will strengthen and expand import capabilities, and construction of two 90 megawatt (Mw) combined-cycle peaking units.
 The company derives about 72 percent of its power from its own generation and buys the balance under long-term contracts and spot market purchases. Future capacity needs will be met through peaking capacity and purchase arrangements as well as demand side management.
 Management is committed to strengthening credit quality and to a balanced capital structure. Low cost tax-exempt financing has been consistently utilized to reduce interest expense and regular common stock sales are planned each year for the period 1992-1996. On April 15, the company sold 2.99 million common shares with proceeds of about $43 million. Nevada Power filed with the Nevada Public Service Commission for permission to sell up to 6 million shares through June 30, 1993, including 2.01 million shares previously authorized.
 Two authorized general rate increases within the past eight months are evidence of the commission's support of credit quality, reversing the commission's previously unsupportive trend. Three earlier general rate applications since November 1987 concluded with rate reductions. A series of rate reductions and writeoffs taken last year had contributed to declining levels of investor protection. The rating assumes the commission will continue to grant sufficient rate relief to support the expanded capital expenditure program.
 The capital structure, including short-term debt and a $119 million capitalized purchase power lease, is sound. Common equity represents 38 percent of total capitalization, preferred 4 percent, and 58 percent total debt, including the capitalized lease at 10 percent.
 Nevada Power provides electric service to a population of more than 838,000, including Las Vegas, the company's headquarters.
 -0- 8/18/92
 /CONTACT: Anne Faber of Fitch, 212-908-0566/
 (NVP) CO: Nevada Power Co. ST: Nevada IN: UTI SU: RTG


PS -- NY077 -- 1111 08/18/92 17:02 EDT
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Publication:PR Newswire
Date:Aug 18, 1992
Words:497
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