CHICAGO — Moody's Investors Service last week downgraded nearly $1.9 billion of debt issued by Omaha Public Power District amid the district's ongoing problems with its nuclear plant.
Moody's lowered its rating on the district's $1.5 billion of senior-lien debt to Aa2 from Aa1 and $374 million of subordinate-lien bonds to Aa3 from Aa2. The outlook is stable.
The ratings firm put the power district on review for possible downgrade last May in light of a two-year extended outage of its Fort Calhoun Nuclear Station.
"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 of almost 2.5 years, indicating a higher business risk profile compared to other similarly rated public power utilities," analysts said in the downgrade report.
The nuclear Station sits along the Missouri River and typically provides 25% of the utility's energy.
The plant has been shut down since April 2011, originally for regularly scheduled maintenance. But a major Missouri River flood followed by increased scrutiny from federal nuclear regulators after the Japan nuclear disaster has repeatedly postponed the plant's restart date.
The increased scrutiny and delays getting the station back online reflect the risk "associated with full ownership of a single unit nuclear plant in a post-Fukushima environment," Moody's said in the downgrade report.
Planned start dates in 2012, then in February and May of 2013 have come and gone. The station is now expected to be restarted during the fourth quarter of 2013, according to Moody's.
The extended outage has reduced the utility's power diversity and forced it to purchase replacement power on the open market at a higher cost than if it had produced it at Fort Calhoun, though low natural gas prices have muted the impact.
Standard & Poor's rates the district AA with a stable outlook.
The OPPD is the nation's twelfth-largest utility with 771,000 customers, serving Omaha and 47 other cities across a 5,000-square-mile area. Its competitive position is strengthened by Nebraska's status as an all-public power state that prohibits investor-owned utilities. It also enjoys the ability to set its own rates.
"The stable outlook reflects our view that OPPD's generation risk profile and strong financial position will continue given the near term expected restart of [the nuclear plant]" as well as other factors, Moody's said.
