Grant PUD bond rating upgraded amid strong finances, financial outlook

Grant PUD’s credit rating just increased, somewhat easing an area of concern fanned during last fall’s election season.

The utility’s debt had become a political issue during last year’s campaigns for PUD commissioner spots, with those winning having been critical of the level of debt carried and others saying it was appropriate, sustainable and better than drastically raising rates.

S&P Global Ratings last month upgraded from AA to AA+ the credit rating of Grant PUD’s electric system, citing strong, sustained finances and risk management.

“The rating action reflects our view of the district’s maintenance of extremely strong financial and operating metrics over several years and the credit strengths provided by its core generating assets whose production costs are among the lowest in the nation,” S&P Global Ratings officials announced June 27.

Reasons for the upgrade include:            

Extremely strong available reserves of $260 million as of fiscal year 2018.

Very strong “debt-to-capitalization ratio” — total debt as a percentage of total assets — of 54 percent* as of 2018 by S&P’s calculation.

Forward power sales (slice) contracts that eliminate “water risk” by ensuring Grant PUD receives stable, predictable revenue from its surplus power sales.

A diverse mix of industrial customers, including data centers and manufacturing, with strong load growth expected into the future.

A commission willing to raise rates when necessary.

The electric system comprises poles, wires, transformers, substations and other equipment needed to transport and sell electricity to the homes and businesses in Grant County.

Grant PUD’s Power Production business, comprising Priest Rapids and Wanapum dams on the Columbia River, earned a confirmed AA-stable rating. Strengths cited included very low production costs, continued successful upgrades of dam machinery, compliance with environmental regulations, generally solid operational performance and continued adequate financial performance.

A press release from the PUD noted rating agencies and PUDs often calculate the debt-to-capitalization ratio differently. Grant PUD doesn’t include available cash in its calculation for a 59-percent debt-to-capitalization ratio expected by year end, toward an eventual ratio in the mid-50-percent range, it said.