U.S. public power utilities are generally seeing a continuation of financial trends rather than large shifts, according to Fitch Ratings’ 2017 U.S. Public Power Peer Study.
“The latest peer study once again shows that lower ratios of capital investment to depreciation, as well as the retention and redeployment of excess cash flow are driving the financial performance throughout the sector,” said Dennis Pidherny, Managing Director, U.S. Public Finance.
Trends highlighted in the 2017 peer study include:
–Debt service coverage improved for wholesale and retail systems across nearly all rating categories.
–The capex-to-depreciation trend continued downward for ‘A’ rated wholesale systems, but stabilized for retail systems, albeit at levels lower than observed earlier this decade.
–Cash on hand medians for ‘A’ rated retail and wholesale systems are at the highest levels observed this decade. Although medians for ‘AA’ rated retail systems declined slightly, the level is well above historical medians. This trend and the lower capital investment rates likely reflect slower demand growth and the deferral of certain capex.
–Leverage metrics were relatively stable for both retail and wholesale systems across rating categories.