|
NEW YORK, July 21, 2003 -- The Tennessee Valley Authority (TVA) maintains a sound financial position despite debt of $25 billion, exposure to riskier nuclear power, and a high fixed-cost profile, Standard & Poor's Ratings Services told a congressional caucus.
"Standard & Poor's views TVA's business strengths to be its competitive rates, a low operating cost profile, ability to set its own rates without regulatory oversight, and legal restrictions that prohibit it from entering riskier business ventures," Scott Taylor, a director in Standard & Poor's Corporate & Government Ratings group, told the TVA Congressional Caucus in Knoxville, Tenn.
TVA, the nation's largest public power system, also operates in strong markets. "The sheer size of TVA's service area allows for greater diversification of economic risk when compared to other public power entities," Taylor said.
TVA faces challenges in the years ahead, including high capital needs in the near term for clean air expenditures and capacity additions, and managing an aging generation base. Another uncertainty stems from the TVA Consensus Title, which if enacted would expose up to 30 percent of TVA's municipal and cooperative load to competition, increasing business risk.
Standard & Poor's rates TVA debt 'AAA', Standard & Poor's highest rating. The rating reflects Standard & Poor's view that, recognizing the lack of any formal expression of support, TVA's status as a government agency provides it with implicit government support.
As of March 31, 2003, TVA had debt of $25 billion on its balance sheet. "TVA has made progress in recent years in debt reduction efforts, but a 1997 plan to halve its debt by 2007 has proven to be unrealistic," Taylor said.
The complete testimony, "Testimony on the Financial Condition of the Tennessee Valley Authority," is available to subscribers to RatingsDirect, Standard & Poor's Web-based credit analysis system, as well as on www.standardandpoors.com. In the left-hand navigation bar under Fixed Income, click on News & Analysis, then specify the energy sector.
Standard & Poor's provides independent financial information, analytical services, and credit ratings to the world's financial markets. With 5,000 employees located in 19 countries, Standard & Poor's is an integral part of the global financial infrastructure. For more information, visit www.standardandpoors.com.
|
Articles 
| View all PennWell sites | View all PennWell events
Add RSS Feed
