Mary Tiger is the Chief Operating Officer of the Environmental Finance Center. Christine Boyle was a Post-Doctorate Fellow of the Environmental Finance Center. Thanks also to the direction and analysis provided by Jeff Hughes and Dayne Batten.
Rising costs, declining demand, and variable sales predicate our research into water utility financial resiliency for the Water Research Foundation. As part of our investigation into revenue, rate, and financial policy trends, we are researching the processes and methods used by rating agencies and their resulting impact on utility operations. Given the amount of capital needed to bring U.S. utilities’ aging infrastructure up to modern standards, the long-term availability of reasonable-priced credit remains a pressing issue, especially as federal and state subsidies decrease. Our research will focus on credit rating agency research and perspectives as a key source of insight regarding access to debt financing. This blog post highlights the importance rating agencies place on rate setting.
S&P Credit Rating Considerations for 18 Drinking Water Utilities
Guest author Peiffer Brandt is Chief Operating Officer at Raftelis Financial Consultants.
“With our concerted conservation efforts, our focus on local water supply development, and the recession . . . we’re selling a lot less water than we originally anticipated,” said Maureen Stapleton, General Manager of the San Diego County Water Authority on July 26th. This is by no means a challenge unique to San Diego County—trying economic times and declining per capita usage have required utilities across the country to take a number of steps to maintain financial sufficiency.
The Water Works Board of the City of Birmingham (Board) has been particularly successful in combatting these challenges through the use of financial goals and policies, which guide the financial operations of the utility. As noted in a previous post, there are a number of different approaches available to utilities. Implementing and following the policies described below has helped the Board to not only maintain financial sufficiency, but to improve its financial situation such that it received a ratings upgrade from Moody’s during nationally and regionally challenging financial times.