LOS ANGELES — Standard & Poor's joined Fitch Ratings in upgrading the California Department of Water Resources' power revenue bonds.

S&P raised the rating one notch to AA March 24 ahead of plans to advance refund $765 million in power supply revenue bonds.

The action affects $5.9 billion of outstanding power revenue bonds.

S&P acted a day after Fitch upgraded the credit one notch to AA-plus. Moody's affirmed its Aa2 rating March 24.

All assign a stable outlook.

The retail order period on the bonds is slated for March 31 with institutional pricing planned for April 1, according to a net road show on munios.com.

The joint senior managers are JPMorgan and RBC Capital Managers. Co-senior manager is Wells Fargo Securities. Hawkins Delafield & Wood LLP is bond counsel.

Fitch and S&P both cited the end this year of a power supply program that was launched in 2001 after former Governor Gray Davis declared a state of emergency during the state's energy crisis.

"We believe that ending the power supply function will reduce the department's power program's revenue requirements and its exposure to power market volatility," S&P Analyst David Bodek wrote.

After this, CDWR will only need to collect revenues to support its power bonds' debt service through their 2022 maturity and will no longer need to fund power purchases, according to S&P.

DWR's Electric Power Fund was created by state legislation in 2001 after Pacific Gas & Electric, Southern California Edison Co. and San Diego Gas & Electric became unable to pay their full power expenses, and the ability of all three of the state's large investor-owned utilities to reliably deliver power was severely compromised. The crisis was exemplified by rolling blackouts around the state in 2000 and 2001.

Bond proceeds will advance refund all or a portion of the outstanding 2008H and 2010L power supply revenue bonds for economic savings.

The power supply revenue bonds are secured by DWR's Electric Power Fund bond charge revenues, imposed by the California Public Utilities Commission on approximately 11.5 million electric customers served by the state's largest investor-owned utilities. The bonds are separately secured from any other obligations of DWR and are not obligations of the state.

DWR issued over $11.3 billion in power supply revenue bonds in 2001 and. DWR entered into more than 50 power supply contracts after Davis directed it to take over the responsibility of procuring the net short power needs for the state's investor-owned utilities. DWR's authority to enter into power supply contracts ended in late 2002.

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