Moody's Investors Service said it has downgraded Omaha Public Power District's senior lien rating to Aa2 from Aa1 and subordinate lien rating to Aa3 from Aa2, affecting approximately $1.5 billion of senior lien and $374 million of subordinate lien debt outstanding.
This action concludes the review for possible downgrade initiated May 29. OPPD's rating outlook is now stable.
The downgrade of the long-term ratings reflects OPPD's continuing challenges of operating its single unit nuclear plant that has incurred an extended outage for almost 2.5 years, indicating a higher business risk profile compared to other similarly rated public power utilities.
While OPPD has minimized the financial impact of the extended outage at the Fort Calhoun Nuclear Station (FCS) by raising rates on a timely basis, reducing off system sales, and cutting expenses, the extended outage highlights the higher business risk associated with full ownership of a single nuclear unit plant, especially given the Nuclear Regulatory Commission's increased scrutiny of nuclear power plants in a post-Fukushima environment.
The recent employment of Exelon Generation Company LLC (Exelon: Baa2 stable), a highly experienced nuclear operator of the largest nuclear fleet in the U.S., may help to mitigate some of this risk moving forward, but operating the facility remains a key risk for OPPD. FCS is now expected to restart in Q4 of 2013 after being down for the last three summers.
