BRADENTON, Fla. -- Progress on the South Carolina Public Service Authority's new nuclear units prompted Moody's Investors Service to affirm its A1 rating on Tuesday.
Moody's said the A1 rating affects $7.1 billion of revenue bonds. It also affirmed the P-1 ratings on commercial paper notes issued by the authority, known as Santee Cooper. The outlook is stable.
Santee Cooper's ratings consider the authority's "strong" fundamental credit factors as it participates in building new units at the V.C. Summer Nuclear Station near Columbia under a recent settlement with the contractor and enhancements to engineering, procurement and construction agreement, said analyst Dan Aschenbach.
While slow productivity levels and remaining engineering risks from the new nuclear technology are affecting construction progress, he said the settlement and contract improvements are positive credit factors for the state-owned public utility.
Work is about half way complete on new Westinghouse AP1000 reactors at the V.C. Summer site being constructed by South Carolina Electric & Gas, owner of 55% of the project.
Santee Cooper owns the remaining 45% of the units, and has financed 78% of its estimated $4.9 billion cost, Moody's said.
About $1.4 billion of capital costs still must be financed.
Santee Cooper has one of the highest amounts of total outstanding debt of any U.S. public power electric utility, according to Moody's. It also has one of the largest amounts of retail and wholesale sales volumes.
"Santee Cooper's share of the two nuclear units will provide long term fuel diversity and the generation will represent significant non-carbon energy supply, potentially a credit positive given the federal EPA's still-expected carbon reduction regulations," Aschenbach said.
On Feb. 9, the U.S. Supreme Court temporarily halted the Environmental Protection Agency's implementation of the Clean Power Plan requiring states to develop strategies for reducing greenhouse gas emissions. A coalition of states is pursuing an appeal of the plan.
Moody's said its A1 rating also considers the established strong generation ownership and management record of the utility, as well as its competitive position, sound financial liquidity, and satisfactory debt service coverage.
Santee Cooper is the primary electric service provider for 2 million people in all 46 counties of South Carolina. It also serves commercial customers and the state's 20 electric cooperatives.