By VERNON ROBISON
Moapa Valley Progress
Fitch Ratings has upgraded its outlook on Overton Power District to a BBB+ rating. On Monday, April 20, the national bond credit rating company revised its rating outlook on the district’s $14.9 million in special obligation revenue bonds series 2008, from a stable (BBB) rating to positive (BBB+).
The report expressed confidence that the district had ample cash reserves to meet its obligations to bond holders. It noted that the OPD had maintained a debt service coverage ratio of 1.3X or better during the years 2013 and 2014 and was on track to continue a similar path.
The report stated a moderate concern in the current uncertainty of the district’s long-term power supply. OPD currently is under a wholesale power contract with Arizona Public Service which expires at the end of 2017. But the reported noted that OPD management is working to secure a new contract by the end of this summer.
“They had considered moving us back to an AAA rating but they wanted to wait and see what happens with our power supply question,” said OPD General Manager Mendis Cooper in an interview with the PROGRESS.
Cooper said that his staff is working on a new contract and that market conditions are looking favorable for the district at this point.
“Right now natural gas is in abundance and the cost is low,” Cooper said. “So we are looking at the longest term that we can get that will be most favorable to the district.”
Cooper added that there were a few other outstanding project which may have also factored into the report. These included the district’s current ongoing efforts to refinance their bonds at lower rates, changes which may be pending at the state legislature, and also questions over transmission costs.
This last element may become the biggest issue for the district. OPD is facing a doubling of its costs to transmit its power through lines belonging to NV Energy. This would have a huge impact on finances for the district, Cooper said.
“We have worked so hard to reduce our costs; reducing our workforce and refinancing bonds and so on,” Cooper said. “You just hate to see all of that eaten up by transmission costs being raised dramatically.”
Cooper said that district staff is exploring options on addressing that problem as well.
“We will be bringing some ideas to the board in the near future,” he said.
