Fitch Ratings affirms Intermountain Power Agency, Utah's
(IPA) series B commercial paper (CP) notes at 'F1+'. The 'F1+' rating
is based on both the external liquidity support provided by The Bank
of Nova Scotia, acting through its New York Agency, in the form of an
Amended and Restated Credit Agreement (the Bank of Nova Scotia Credit
Agreement), and the internal liquidity support provided by IPA.
Effective May 11, 2006, the Bank of Nova Scotia Credit Agreement, which currently supports the series B-1, B-2 and B-3 CP notes, will be amended to support all series B-4 CP notes thereafter issued to roll-over the series B-4 and B-5 CP notes, which are currently supported by a JPMorgan Chase Bank Credit Agreement. The amendment provides for: (i) an initial increase in the commitment of the Bank of Nova Scotia Credit Agreement to an amount of $372,500,000, effective May 11 to but not including June 7, 2006; and (ii) 384,000,000, effective June 7, 2006, in both cases, to support all series B-4 CP notes issued on and after May 11, 2006. The rating on the entire issue of the series B CP notes will expire on June 30, 2009, the termination date of the Bank of Nova Scotia Credit Agreement, unless such date is extended pursuant to its terms, or upon any prior termination of this agreement.
The amended Bank of Nova Scotia Credit Agreement continues to cover only the payment of principal due upon the maturity of the notes, while IPA remains obligated to provide for interest due on the notes. Goldman, Sachs & Co. is the CP dealer for the Series B-1 notes, Morgan Stanley & Co. Incorporated is the dealer for the Series B-2 notes and UBS Securities LLC is the dealer for the series B-3 and B-4 notes.
IPA's underlying 'AA-' long term rating is supported by a competitive wholesale cost of electric power, consistently above average electric plant performance, solid financial performance, and highly rated long-term power purchasers. The vast majority (96%) of IPA power sales and revenues are attributable to six California municipal power purchasers: Los Angeles Department of Water and Power (LADWP) and the city electric departments of Pasadena and Riverside account for approximately 75% of IPA's revenues and are all rated 'AA-' by Fitch; the remaining three California power purchasers are rated 'A+'.
IPA's debt rating is further supported by take-or-pay power sales agreements with its power purchasers which extend to 2027, three years beyond the latest maturity of IPA's long term debt. Credit weaknesses are few and center on the single project operating risk of IPA's coal-fired generating station and recently rising cost of fuel (coal) for power generation. The risk of material operating problems at IPA's generation station is mitigated by the coal project's consistently strong operating performance, which exceeds industry standards. While the rising cost of coal is a more recent concern, the level of the cost increase is modest and should remain manageable for the foreseeable future.
Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.
Effective May 11, 2006, the Bank of Nova Scotia Credit Agreement, which currently supports the series B-1, B-2 and B-3 CP notes, will be amended to support all series B-4 CP notes thereafter issued to roll-over the series B-4 and B-5 CP notes, which are currently supported by a JPMorgan Chase Bank Credit Agreement. The amendment provides for: (i) an initial increase in the commitment of the Bank of Nova Scotia Credit Agreement to an amount of $372,500,000, effective May 11 to but not including June 7, 2006; and (ii) 384,000,000, effective June 7, 2006, in both cases, to support all series B-4 CP notes issued on and after May 11, 2006. The rating on the entire issue of the series B CP notes will expire on June 30, 2009, the termination date of the Bank of Nova Scotia Credit Agreement, unless such date is extended pursuant to its terms, or upon any prior termination of this agreement.
The amended Bank of Nova Scotia Credit Agreement continues to cover only the payment of principal due upon the maturity of the notes, while IPA remains obligated to provide for interest due on the notes. Goldman, Sachs & Co. is the CP dealer for the Series B-1 notes, Morgan Stanley & Co. Incorporated is the dealer for the Series B-2 notes and UBS Securities LLC is the dealer for the series B-3 and B-4 notes.
IPA's underlying 'AA-' long term rating is supported by a competitive wholesale cost of electric power, consistently above average electric plant performance, solid financial performance, and highly rated long-term power purchasers. The vast majority (96%) of IPA power sales and revenues are attributable to six California municipal power purchasers: Los Angeles Department of Water and Power (LADWP) and the city electric departments of Pasadena and Riverside account for approximately 75% of IPA's revenues and are all rated 'AA-' by Fitch; the remaining three California power purchasers are rated 'A+'.
IPA's debt rating is further supported by take-or-pay power sales agreements with its power purchasers which extend to 2027, three years beyond the latest maturity of IPA's long term debt. Credit weaknesses are few and center on the single project operating risk of IPA's coal-fired generating station and recently rising cost of fuel (coal) for power generation. The risk of material operating problems at IPA's generation station is mitigated by the coal project's consistently strong operating performance, which exceeds industry standards. While the rising cost of coal is a more recent concern, the level of the cost increase is modest and should remain manageable for the foreseeable future.
Fitch's rating definitions and the terms of use 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 are also available from the 'Code of Conduct' section of this site.