Back to back years of strong performances, a dedication to stabilizing finances and the expectation of continuing improvement have led Fitch Ratings to raise the Grays Harbor PUD’s financial outlook from ‘negative’ to ‘stable’ and award the utility with a ‘A’ credit rating.
“This is the result of a team effort to develop and then successfully execute a financial plan,” said PUD Board President Russ Skolrood. “This goes to prove that hard work and planning can make a real difference. I am very proud of the PUD staff and their work that brought us to this point.”
In compiling their report, Fitch Ratings examined the PUD’s financial history over the last decade and outlook for the next four years, their ability to respond and adjust to changing power markets and their financial liquidity, including stability in financial reserves.
The Fitch Ratings report credits an improved financial performance in 2017 and 2018, driven by favorable conditions resulting in higher operating income and the utility’s effort to rebuild cash reserves. Perhaps most importantly, the report states Fitch’s expectation that the financial profile will remain supportive of the rating through 2022, when “improvement is expected due to a decline in operating costs from the termination of an expensive power purchase contract. After that point, additional cash flow is expected to be available to fund the utility's needed capex.” This refers to the PUD’s share of the Fredrickson Natural Gas Plant which is expected to cost the utility $8.7-million in 2020. That contract expires in 2022, leaving the PUD with greater flexibility in operating expenses.
“For years we’ve spoken about the Bridge to 2022, when expensive power contracts will begin to expire,” said PUD General Manager Dave Ward. “Fitch’s report tells us that not only is the bridge working and the utility is on firm ground moving forward, but that they are confident that it will continue to work. That shows a confidence in the future of the PUD and the direction in which we are headed.”