Moody’s Investors Service late Tuesday upgraded the Massachusetts Municipal Wholesale Electric Company’s $715 million of outstanding revenue debt.
The debt for Nuclear Mix No. 1, and Nuclear Projects Nos. 3, 4, and 6 now each carry a Baa1 rating, up from Baa2. Moody’s also upgraded debt for Nuclear Project No. 5 to A3 from Baa2, and the Stony Brook Intermediate Project and the Wyman Project each to A2 from A3.
In November, Standard & Poor’s upgraded Project 5 to A from A-minus and Wyman to A-minus from BBB-plus while affirming its A-minus ratings on Projects 1, 3, 4, and the Stony Brook project, and its BBB-plus rating on Project 6.
Fitch Ratings rates all the projects A-minus. The agency is currently reviewing the credit and will have its findings available in the next few weeks, according to senior director Hiran Cantu.
The Moody’s change reflects the MMWEC’s improved position in the market and strong liquidity, along with each project’s performance and debt structure. Roughly 28 municipal participants pay the issuer’s debt service and operating costs for power supply projects. As the electric company’s debt service payments have leveled off, costs to its members have declined while other electric suppliers in the state have increased their rates.
“Overall, the cost structure of MMWEC has improved and as it’s compared to the electric market in Massachusetts, for other providers in that state, their prices have gone up,” Moody’s senior vice president, Dan Aschenbach, said.
Conversely, the Moody’s release said the MMWEC has an overall low debt service reserve requirement for a joint power agency.
The MMWEC is a public corporation created in 1976 to offer lower electrical costs to smaller municipal light departments throughout the state. The 28 participants have an average weighted credit rating of A2, according to Aschenbach. Contracts between the MMWEC and the 28 municipalities are based on a take-or-pay obligation in which participants must pay debt service and operating costs, regardless of whether the municipality used the MMWEC’s power supply.
