In This Issue: Cover StoryCan Not-For-Profit Power Companies Juice Up Their Environmental Standing?
By Robert McNatt, New York
The search for environmentally friendly generation boils down to a simple choice: coal versus the other technologies. There are a growing number of ways to mitigate coal's environmental impact, including scrubbers, integrated gasification combined-cycle generators, and carbon capture and sequestration technology. These range in effectiveness from protective to almost wholly experimental. Low Risk Profiles Support Sound Electric Cooperative Credit Quality
By David Bodek, New York
Ratings assigned to cooperative utilities are universally within the investment-grade spectrum and predominantly have stable outlooks. About 75% of the generation and transmission cooperatives are rated 'A-' or higher. Most are in the 'A' rating category, with limited ratings in the 'AA' and 'BBB' rating categories. Coal Remains A Burning Issue For Electric Cooperatives And Public Power Utilities
By David Bodek, New York
Coal remains the backbone of the nation's energy production because of its favorable costs and it accounts for about 50% of all electricity sold in the U.S. Nevertheless, some utilities that have been considering coal capacity additions are reassessing project economics following recent sharp increases in construction costs. Applying Key Rating Factors To U.S. Cooperative Utilities
By David Bodek, New York
Evaluating all utilities' financial performance begins with assessing business risk exposure. Greater business risk requires stronger financial metrics to achieve a given rating. The factors underlying Standard & Poor's business risk assessments are similar for all utilities, whether cooperative, public power, or investor owned. All U.S. Prepaid Natural Gas Transactions Are Created Equal...Or Are They?
By Kenneth L. Farer, New York
Prepaid gas transactions contain credit enhancements to eliminate the credit risk associated with the municipal participants, and to make bondholders indifferent to the variability of gas prices and interest rates. Since the transaction's structure shifts almost all of the credit risk to the gas supplier, ratings reflect the gas suppliers' ratings. Debt Not Imputed To Municipal Utilities In Structured Prepaid Natural Gas Transactions
By David Bodek, New York
Standard & Poor's treats suppliers of prepaid natural gas transactions as having borrowed money from the joint power authorities and having incurred debt when they receive prepayments. Yet, we do not treat the municipal utility gas offtakers as having incurred debt when calculating their adjusted debt service coverage. The Forces Behind Growing U.S. Public Utility Interest In Wind Power
By Peter V. Murphy, New York
Wind energy has emerged as the leading option among renewable technologies due to its vast untapped potential, with a widespread range of suitable sites; the relatively short project construction time frame; and the absence of carbon or other harmful emissions. California Public Power Utilities Wrestle With Competing Energy Demands And Global Warming Strategies
By Peter V. Murphy, New York
Although California public power utilities will continue to face challenges that could affect credit quality, Standard & Poor's expects their rating stability to continue.
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