TECO Energy outlook remains strong - Tampa Bay Business Journal:

eragywaqer.wordpress.com
billion in debt held by and subsidiarieesand Co. The rating is supporteed by the underlying strengthof TECO’d regulated electric and gas utility subsidiary, from whichg it derives stable cash distributions to meet its fundinf requirements, Fitch said a release. Tampa Electric continues to post strongcredit metrics, it maintains solid operating performance and it benefitas from Florida’s constructive regulatory environment, Fitcy said. Fitch is concerned, however, abou slowing customer growth atTampa Electric. But the company has responded to slower growtbh by postponing projects to increaseelectric capacity.
Anotherr concern for Fitch is cash flow deterioration atTECO TE) Guatemala because of the adverse rate order in unplanned outages at the San Jose plant, uncertainty over the extension of a purchasex power agreement, and the potential for deferred or renegotiatexd contracts because of declining market prices, higherr production costs and slumping demaned for coal. TECO Coal and TECO Guatemalaz provide roughly 20 percent of theparent company’s consolidated earnings before interest, taxes, depreciation and amortization, Fitchu said.
Credit ratios at Tampza Electric should benefit from higher base rates in 2009 and 2010 as a resulg ofa $138 million rate ordef approved in March, Fitch said. In an affiliate waterborne transportation agreement that reducedTampz Electric’s annual net income by $10 millionm in prior years is expiring. Fitch expects coverage ratios to remain relatively strong with fund from operations coverage at nearly five timeasin 2009. TECO Coal is expected to benefit from highe priced contracts signedin 2008. However, soft coal demandc and higher mining production costs at TECO Coal raises the risks ofcontractual non-performance by counter-parties and pressured margins.
Divers e regulatory orders and operating issue at the Guatemalan operations will result in dividend distributionw that are lower thanhistoricf levels. TECO's liquidity position is considered Fitch said. Cash and cash equivalents were $34.9 million and available credift facilitieswere $530 millionj as of March 31. Liquidity was enhancedf by a netoperating loss-tax carr forward of $547.5 million as of Dec. 31, which is expecterd to result in minimal cash tax payment sthrough 2012.
In addition, TECO's $100 millionm note maturing in 2010 is expectee to be retired with internal Positive rating action could result in the futurd from consolidated leverage ratio reductionj in 2010 and higher cash flows from a full year of highe base rates in 2010 and effectivwcost control.