DALLAS Colorado Springs next week plans to price about $130 million of revenue bonds for its combined electric and water utilities, which will help finance a 50-mile water pipeline under construction from the Pueblo Reservoir.
The bonds are scheduled to price Sept. 17 through negotiation with senior manager JP Morgan. Series B-1 is expected to be about $59.8 million, while Series B-2 is expected to be $70.2 million.
The bonds carry ratings of AA from Standard & Poor’s and Fitch Ratings and Aa2 from Moody’s Investors Service, all with stable outlooks.
The 2013B proceeds will be combined with other funds to finance a portion of the Southern Delivery System that is designed to deliver up to 96 million gallons of water per day to Colorado Springs and El Paso County.
The project includes connection to Pueblo Dam in Pueblo County to the south, raw water pipeline construction in El Paso and Pueblo counties and finished water pipeline in El Paso County.
The pipeline is scheduled to be delivering water by 2016.
A water treatment plant is the largest and most complex component of the SDS infrastructure, officials say. Construction of the plant started this year. Also scheduled this year are continued pipeline construction in El Paso County, work to address erosion and sedimentation on Fountain Creek, and continued land acquisition for completion of the project.
“The timing of SDS could not be more important given the drought conditions we are facing and water needs to support a recovering economy,” said John Fredell, SDS program director.
The solid ratings reflect the utility’s “demonstrated ability to manage its significant capital improvement plan, including construction of the Southern Delivery System that is on schedule and under budget to date,” according to Moody’s analyst Jennifer M. Chang.
Drought conditions in the utility’s service area continues to adversely impact the water system, depleting a notable amount of water storage and requiring water restrictions, Chang wrote.
Utilities have implemented rate increases to manage water revenues and usage during the drought.
“Wildfires over the past two years have not notably impacted the utilities’ customers or assets, though a transmission line has been replaced,” Chang noted.
Among the largest fires this year was the Black Forest fire that destroyed several homes in the heavily wooded suburb north of Colorado Springs.