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WPPSS REFUNDING BONDS RATED 'AA' BY FITCH, TREND DECLINING -- FITCH FINANCIAL WIRE --

 NEW YORK, May 11 /PRNewswire/ -- Washington Public Power Supply System's $700 million Nuclear Project Nos. 1, 2 and 3 refunding revenue bonds, series 1993A, are rated "AA" by Fitch. The rating on $6.7 billion of outstanding parity revenue bonds is affirmed at "AA". The credit trend, which was stable, is changed to declining. The bonds are scheduled to be sold the week of May 17 through negotiation by a syndicate led by Goldman Sachs & Co.
 The declining credit trend reflects serious deterioration in Bonneville Power Administration's financial position, caused by abnormally low streamflows on its hydroelectric system, a resulting sharp falloff in sales outside the Pacific Northwest region, and continued softness in the aluminum industry. The consequence is a significant net loss forecast for fiscal year 1993 and a substantial decline in total reserves from earlier estimates. Although Bonneville is under considerable pressure, bondholder protection remains strong. Factors supporting the current rating include Bonneville's competitive cost power, extensive transmission system and ability to defer payments to the U.S. Treasury, which payments come after its obligations on the net billed project bonds.
 To improve its financial standing, Bonneville is in the process of completing a final rate proposal for the fiscal year 1994-95 rate period, which is expected to result in a 15-25 percent increase in the priority firm power rate over that currently in effect. This is well above estimates made earlier in the year. Support for the rate increase appears generally good, although certain utility customers and the direct service industries (aluminum smelters) have voiced concerns about the impact on business operations. As part of a longer-term effort to strengthen finances and reduce the volatility of its net revenues, Bonneville is developing a ten-year plan, which would provide much greater rate flexibility, reduce expenditure programs and ensure that a sizeable cash fund is continually maintained.
 In monitoring the credit quality of the Supply System, key factors that Fitch will be closely evaluating include: the ability of Bonneville to implement its ten-year financial plan, the impact of the Endangered Species Act on regional activities, the legal implications of plans to possibly terminate Projects Nos. 1 and 3 and the potential passage of an energy tax, which would significantly impact the aluminum industry and the cost of hydroelectric generation.
 -0- 5/11/93
 /CONTACT: Alan Spen, 212-908-0594, or Rebecca Bachman, 212-908-0516, both of Fitch/


CO: Washington Public Power Supply System ST: Washington IN: UTI SU: RTG

GK -- NY060 -- 7098 05/11/93 13:21 EDT
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Publication:PR Newswire
Date:May 11, 1993
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