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Utility’s credit rating gets AMPed!

Submitted by on 1, April 14, 2009 – 6:50 amNo Comment

I don’t think that will ever get old.

Anyway. This weekend a tipster alerted me to this press release (registration may be required) from Standard & Poor’s that says the rating agency has upgraded Alameda Municipal Power’s rating on the electric bonds it currently holds to A from A-.

“The raised rating reflects our opinion of AMP’s good financial performance in recent years and what we view as its strong resource planning through participation in clean energy projects,” Standard & Poor’s credit analyst Ian Carroll was quoted as saying in the release. The November sale of the recently rebranded utility’s failing telecom business also helped, the release says.

But what really caught my attention was this:

We also believe that cash reserves and rate setting flexibility, moreover, should give the utility room to make adjustments, should there be costs associated with litigation. At this time, there are no additional bonds contemplated, although we understand that management expects to review strategies for rate setting beginning in fiscal 2011. Rates are currently an estimated 20% below the regional average. (emphasis added)

I checked in with AMP’s Bill Garvine, who confirmed the utility is preparing to embark on a “cost of service study,” though he said that could happen sooner or later than the date outlined in S&P’s release.

“That’ll look at establishing a real understanding of all the things that contribute to cost,” Garvine said of the pending study. (He didn’t have any comment on the “litigation costs” bit in case you were wondering, except to say that the utility is adequately prepared to deal with those costs.)

On another note, Garvine was also kind enough to drop a quick stimulus update. He mentioned the utility is going to be taking a close look at the federal stimulus package to see if there’s money in there for any big projects like “smart metering,” which according to this Wikipedia article, is a higher-tech electric meter that offers more detailed information on electric use (think hourly tabs that give electric companies the opportunity to pursue, say, peak pricing programs).

The city has so far pulled in $3.2 million for a host of projects; the school district is slated to pick up $2.7 million per school board prexy Mike McMahon (see his February 25 entry).

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