Fitch Ratings has placed the Sam Rayburn Municipal Power Agency's (SRMPA or agency) power supply system revenue refunding bonds series 2002A and B, rated 'BBB+', on Rating Watch Evolving.
The placement on Rating Watch Evolving is due to the decision of the Public Utility Commission of Texas (PUCT) to address Project Cambridge as part of PUCT's review of Entergy Texas Inc.'s (ETI) rate case.
Fitch expects to resolve the Rating Watch after the PUCT addresses Cambridge as part of ETI's rate case thereby removing any regulatory uncertainty.
PROJECT CAMBRIDGE
In the fall of 2011, SRMPA executed contracts under Project Cambridge (Cambridge) whereby the agency amended its wholesale power supply contract with Entergy Wholesale Marketing (EWOM). The effective date for Cambridge was Dec 1, 2011. FERC approved the appropriate Cambridge agreements. The State Utility Commissions of Louisiana and Texas did not intervene. The State Utility Commissions of Arkansas and Mississippi filed their respective pro forma interventions but took no position.
Cambridge resulted in SRMPA serving an additional 545MW of load through ETI and Vinton Public Power Authority. The agency notes that its legacy wholesale power supply obligation to the three member cities of Livingston, Jasper and Liberty has been ring fenced from Cambridge. The agency further notes that the successful operation of Cambridge or lack thereof should have no impact on SRMPA's legacy operations, the revenue from which secures the bonds rated by Fitch.
Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.
In addition to the sources of information identified in Fitch's Revenue-Supported Rating Criteria, this action was additionally informed by information from Creditscope.
Applicable Criteria and Related Research:
--'Revenue Supported Rating Criteria' (June 12, 2012);
--'U.S. Public Power Rating Criteria' (Jan. 11, 2012);
--'Fitch Affirms Sam Rayburn Muni Power Agency's, TX Power Supply System Revs at 'BBB+'; Outlook Stable' (July 12, 2011).
Applicable Criteria and Related Research:
Revenue-Supported Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681015
U.S. Public Power Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=665815
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