Standard & Poor’s Rating Services recently raised its rating on the City of Oak Ridge’s electric system’s revenue debt one notch, from ‘A-‘ to ‘A.’
“This is very good news for the City of Oak Ridge,” stated City Manager Mark Watson. “Bonds for the City’s electric utility systems were upgraded and recognized for the stable outlook observed during Standard & Poor’s normal review. A better bond rating will have a positive impact on lower interest rate considerations in the future, if needed.”
Standard & Poor’s upgrade reflects an assessment of the system's strong financialperformance, evidenced by maintaining very strong debt service coverage (DSC) since 2009. In addition, moderate, additional capital requirements were another one of the reasons for the upgrade, recognizing past investment into the system. Standard & Poor’s profile also noted that Oak Ridge management has historically used strong net margins to reinvest in the system, which has minimized the need for large bond issuances.
The stable outlook reflects Standard & Poor's opinion that Oak Ridge will likely maintain its strong net margins and structurally sound finances. The City of Oak Ridge has strong margins and lower operational and financial risks associated with being a TVA distributor.
The City of Oak Ridge with a population of nearly 30,000, is in southern Anderson County and eastern Roane County, about 22 miles northwest of Knoxville. The City of Oak Ridge serves more than 16,000 electric accounts; approximately 86% of that customer base consists of residential customers.
The City is a customer of the Tennessee Valley Authority, whose diverse and reliable generation fleet also contributed to the rating increase.
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