Fitch Affirms Connecticut Municipal Electric Energy Cooperative, Transmission Entity Ratings
May 23, 2022
by Paul Ciampoli
APPA News Director
May 23, 2022
Fitch Ratings has affirmed ratings for Connecticut Municipal Electric Energy Cooperative (CMEEC) and Connecticut Transmission Municipal Electric Energy Cooperative at “AA-.” The rating agency cited, among other things, ample liquidity, very low leverage and a strong operating risk profile.
The Rating Outlook is Stable.
Fitch affirmed the following ratings at AA- for CMEEC:
- $46.27 million 2013 series A, power supply system revenue bonds;
- $11.4 million 2021 series A, transmission services revenue bonds;
- $22.7 million 2022 series A, power supply system revenue bonds (forward delivery Oct. 6, 2022);
- Issuer Default Rating (IDR).
It also affirmed the AA- rating for $16.3 million 2021 series A, transmission system revenue bonds for Connecticut Transmission Municipal Electric Energy Cooperative.
The Connecticut Transmission Municipal Electric Energy Cooperative was created by CMEEC in 2009. As a separate joint action agency, it acquired local transmission assets in order to provide transmission services required by CMEEC for its members and customers.
Fitch said that the ‘AA-‘ long-term bond ratings and IDR for CMEEC and the Connecticut Transmission Municipal Electric Energy Cooperative “reflect very strong revenue defensibility, a stable consolidated financial profile, with ample liquidity and very low leverage, and a strong operating risk profile.” The rating “also incorporates limited capital spending needs and a declining debt burden, which should allow leverage ratios to remain very low,” Fitch said.
Revenue defensibility is based on the long-term, all-requirements contracts and strong member credit quality that supports CMEEC’s revenue base, Fitch said.
“Operating costs are low, although energy supply is concentrated in near-to-medium term market power purchases, subjecting CMEEC to potential variability in market pricing. A comprehensive hedging policy helps mitigate this risk, although costs are still expected to rise. Capital plans are limited to minor maintenance with no new debt requirements projected through 2026,” it said.
“We are pleased by this rating affirmation,” said CMEEC Chief Executive Officer Dave Meisinger. “We believe Fitch recognized our strong overall financial profile and metrics, combined with appropriate long-term decisions such as the recent divestiture of our largest generation asset and a renewed focus on mapping out a path toward cost-effective reduction of our carbon footprint.”
Meisinger concluded that, “our stable ratings outlook helps ensure that CMEEC and its member municipal electric utilities will have competitive access to financial markets, which further positions the CMEEC members to maintain their reasonable retail electric rates.”
CMEEC’s member municipal electric utilities include Norwich Public Utilities, Jewett City Department of Public Utilities, Groton Utilities, Bozrah Light & Power, Third Taxing District of the City of Norwalk and South Norwalk Electric and Water.