HATTIESBURG, Miss. – Fitch Ratings has upgraded Cooperative Energy’s $35.4 million series 2009A Mississippi Business Finance Corporation Gulf Opportunity Zone Bonds to ‘A’ from ‘A-‘. Cooperative Energy (the Cooperative), which recently changed its name from South Mississippi Electric Power Association, is a not-for-profit generation and transmission cooperative that provides wholesale electric service to 11 retail electric distribution cooperatives located in southern and western Mississippi.
The Cooperative’s Members serve a region covering more than 32,000 square miles and a population of nearly one million with a member base of approximately 423,000. The Members’ aggregate retail member base is diversified and benefits from a large, stable residential base which accounted for 56.9 percent of total member electric revenues in 2015.
The Cooperative’s credit strength is supported by long-term all-requirements contracts with its Members and a history of maintaining sound long-term financial goals. Fitch stated that the upgrade reflects lower financial and operating risk, as well as a more balanced and diverse power supply portfolio. Cooperative Energy’s power supply has evolved, with the expansion of existing resources, expiration of purchased power contracts, and addition of natural gas-fired generation and renewables. Reliance on purchased power has declined; additionally, energy provided from coal resources has dropped from 55 percent (2011) to 21 percent (2015).
“This rating upgrade reflects the success of our strategy to move from purchased power to owned generation resources, and from coal to natural gas and renewable energy,” said Cooperative Energy President/CEO Jim Compton. “The result for our Members is lower borrowing costs and more favorable rates.”
Fitch found that Cooperative Energy’s financial metrics continue to strengthen and are in-line with ‘A’ rated generation and transmission peers. Fitch further determined that Member financial performance is solid. Total Member equity capitalization has been on the rise since 2011, and stood at 59.4 percent for 2015, in-line with ‘A’ rated peers.
Cooperative Energy’s future power supply and capital expenditure plans have positively changed since Fitch’s last review.
Cooperative Energy works with the Power of 12 (Cooperative Energy and 11 Member electric cooperatives) to provide electricity from the Mississippi Delta to the Coast. The 11 distribution cooperatives own and maintain approximately 56,900 miles of distribution lines and provide service to approximately 423,000 homes and businesses throughout 55 counties in Mississippi.
View the Fitch News Release here
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