Standard and Poor’s Rating Services recently raised its rating on 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,” City Manager Mark Watson said. “Bonds for the city’s electric utility systems were upgraded and recognized for the stable outlook observed during Standard and Poor’s normal review. A better bond rating will have a positive impact on lower interest rate considerations in the future, if needed.”
Standard and Poor’s upgrade reflects an assessment of the system’s strong financial performance, evidenced by maintaining very strong debt service coverage since 2009. In addition, moderate, additional capital requirements were another one of the reasons for the upgrade, recognizing past investment into the system. Standard and Poor’s profile also noted that Oak Ridge management has historically used strong net margins to re-invest in the system, which has minimized the need for large bond issuances.
The stable outlook reflects Standard and 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 Tennessee Valley Authority distributor.
Oak Ridge has a population of nearly 30,000, and it is in southern Anderson County and eastern Roane County, about 22 miles northwest of Knoxville. The city serves more than 16,000 electric accounts; approximately 86 percent of that customer base consists of residential customers.
The city is a TVA customer, and the public utility’s diverse and reliable generation fleet also contributed to the rating increase.