Moody’s Investors Service Monday upgraded $327 million of debt issued for the California Independent System Operator to A1 from A2.

The Cal ISO is a nonprofit public-benefit corporation that operates the state’s wholesale transmission grid, with the aim of providing open access to electricity providers. It issued bonds using the California Infrastructure and Economic Development Bank as a conduit issuer.

The upgrade reflects the steady improvement in Cal ISO’s financial position and the successful implementation of a market redesign and technology upgrade, Moody’s said in a release.

The operator also benefits from a strong stress-tested cost recovery mechanism, a more stable electricity industry in the state, and the stable credit profile of California’s investor-owned utilities, the rating agency said.

Moody’s also noted that the ISO is fire-walled from the state government, which has no ability to access its financial accounts or manage its fiscal affairs.

The ISO was originally created as part of the late 1990s deregulation of electricity in California, a plan that imploded in the early 2000s with a series of rolling blackouts amid accusations that the state’s electricity market was being manipulated by bad actors like Enron. The ISO’s financial performance during that crisis was cited as a credit positive by analysts.

“The strength of the bond security for the Cal ISO bonds was evidenced by the severe stress experienced during the 2000-2001 California power crisis,” according to Moody’s. “Despite the $6.4 billion of defaulted payments by market participants to the Cal ISO market clearing account in 2001, Cal ISO continued to operate and debt service was paid on time and in full on its bonds.”

Moody’s noted this week that the ISO now plays a “more established” role in the state’s electricity marketplace and benefits from a supportive regulatory environment.

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