American Municipal Power, Inc.
CUSIP 02765ULN2
- Issue Currency: United States of America Dollars
- Announcement Date: 05-Sep-2018
- News: Moody`s Investors Service has upgraded the rating on the outstanding $685.2 million American Municipal Power Inc. - Meldahl Hydroelectric Project Revenue Bonds to A2 from A3. The outlook has been revised to stable from positive. RATINGS RATIONALE The upgrade on the Meldahl Hydroelectric Project Revenue Bonds to A2 considers the satisfactory operating experience of the new hydro-electric facility with 2017 capacity factor of 53.4% and AMP and the participants deriving the value expected from the project. In addition, now that the full weight of debt service has been phased in the participants have generally managed adequately the transition to full cost recovery. The A2 rating considers the strong bond security which includes the unconditional take-or-pay obligation of the 48 participants (weighted average credit quality of A3) in the project to pay O&M and debt service on the bonds. The 51.4% obligation share of the City of Hamilton, Ohio Electric Enterprise (Electric Revenue bonds rated A3/stable) bears significant weight in the rating. The obligation of the 48 participants is absolute and unconditional regardless of whether the project is operating or operable. The project has a fully funded maximum annual debt service reserve. The rating also considers the environmental attributes of the hydro facility and the long-term economic value of the project, as well as the A1 issuer rating assigned to American Municipal Power, Inc. which has been an effective power supply agency to its members. The levelized cost of energy and power from Meldahl is projected to be in the $80/MWh range given the forecasted capacity factor. According to projections, the all-in cost is flat at least through 2038 due to level debt service and minor operating expense changes. While the all-in cost is above today`s regional energy market price, the energy and capacity is a long term source of carbon neutral electricity which makes up a small percentage of each municipal participant`s power supply mix. The US Army Corps of Engineers Ohio River lock and dams are required for commercial river transportation which is key to the expected certainty of favorable capacity factors in the 50% range. The Meldahl Project is part of AMP Inc`s power resource diversity strategy to lessen the exposure of the participating municipal utilities to the regional wholesale energy markets. AMP has participated in financing a portion of the Prairie State coal-fired generation facility and the Freemont Energy Center natural gas fired units. AMP has also issued revenue bonds (Combined Hydroelectric Project rated A2) to finance three new hydroelectric facilities along the Ohio River Cannelton (88MW); Smithland (76MW); and Willow Island (44MW). The Meldahl Project is operated by the City of Hamilton, Ohio Electric Enterprise (Electric Revenue bonds rated A3/stable), who has a 51.4% share of the output. A management committee has been established with AMP and Hamilton representation. The AMP-Hamilton agreement also provided that AMP Inc. acquire 48.6% (34MW) of Hamilton-owned Greenup hydro facility. RATING OUTLOOK The rating outlook is stable given the Meldahl Project is in commercial operation and there are strong bond security provisions. A sound operating record that establishes the Meldhal hydroelectric project as a key asset and participants successfully have incorporated the higher costs into their rates is a positiive factor.
- Issue Currency: United States of America Dollars
- Announcement Date: 05-Sep-2018
- News: Moody`s Investors Service has upgraded the rating on the outstanding $685.2 million American Municipal Power Inc. - Meldahl Hydroelectric Project Revenue Bonds to A2 from A3. The outlook has been revised to stable from positive. RATINGS RATIONALE The upgrade on the Meldahl Hydroelectric Project Revenue Bonds to A2 considers the satisfactory operating experience of the new hydro-electric facility with 2017 capacity factor of 53.4% and AMP and the participants deriving the value expected from the project. In addition, now that the full weight of debt service has been phased in the participants have generally managed adequately the transition to full cost recovery. The A2 rating considers the strong bond security which includes the unconditional take-or-pay obligation of the 48 participants (weighted average credit quality of A3) in the project to pay O&M and debt service on the bonds. The 51.4% obligation share of the City of Hamilton, Ohio Electric Enterprise (Electric Revenue bonds rated A3/stable) bears significant weight in the rating. The obligation of the 48 participants is absolute and unconditional regardless of whether the project is operating or operable. The project has a fully funded maximum annual debt service reserve. The rating also considers the environmental attributes of the hydro facility and the long-term economic value of the project, as well as the A1 issuer rating assigned to American Municipal Power, Inc. which has been an effective power supply agency to its members. The levelized cost of energy and power from Meldahl is projected to be in the $80/MWh range given the forecasted capacity factor. According to projections, the all-in cost is flat at least through 2038 due to level debt service and minor operating expense changes. While the all-in cost is above today`s regional energy market price, the energy and capacity is a long term source of carbon neutral electricity which makes up a small percentage of each municipal participant`s power supply mix. The US Army Corps of Engineers Ohio River lock and dams are required for commercial river transportation which is key to the expected certainty of favorable capacity factors in the 50% range. The Meldahl Project is part of AMP Inc`s power resource diversity strategy to lessen the exposure of the participating municipal utilities to the regional wholesale energy markets. AMP has participated in financing a portion of the Prairie State coal-fired generation facility and the Freemont Energy Center natural gas fired units. AMP has also issued revenue bonds (Combined Hydroelectric Project rated A2) to finance three new hydroelectric facilities along the Ohio River Cannelton (88MW); Smithland (76MW); and Willow Island (44MW).
- Issue Currency: United States of America Dollars
- Announcement Date: 05-Sep-2018
- News: Moody`s Investors Service has upgraded the rating on the outstanding $685.2 million American Municipal Power Inc. - Meldahl Hydroelectric Project Revenue Bonds to A2 from A3. The outlook has been revised to stable from positive. RATINGS RATIONALE The upgrade on the Meldahl Hydroelectric Project Revenue Bonds to A2 considers the satisfactory operating experience of the new hydro-electric facility with 2017 capacity factor of 53.4% and AMP and the participants deriving the value expected from the project. In addition, now that the full weight of debt service has been phased in the participants have generally managed adequately the transition to full cost recovery. The A2 rating considers the strong bond security which includes the unconditional take-or-pay obligation of the 48 participants (weighted average credit quality of A3) in the project to pay O&M and debt service on the bonds. The 51.4% obligation share of the City of Hamilton, Ohio Electric Enterprise (Electric Revenue bonds rated A3/stable) bears significant weight in the rating. The obligation of the 48 participants is absolute and unconditional regardless of whether the project is operating or operable. The project has a fully funded maximum annual debt service reserve. The rating also considers the environmental attributes of the hydro facility and the long-term economic value of the project, as well as the A1 issuer rating assigned to American Municipal Power, Inc. which has been an effective power supply agency to its members. The levelized cost of energy and power from Meldahl is projected to be in the $80/MWh range given the forecasted capacity factor. According to projections, the all-in cost is flat at least through 2038 due to level debt service and minor operating expense changes. While the all-in cost is above today`s regional energy market price, the energy and capacity is a long term source of carbon neutral electricity which makes up a small percentage of each municipal participant`s power supply mix. The US Army Corps of Engineers Ohio River lock and dams are required for commercial river transportation which is key to the expected certainty of favorable capacity factors in the 50% range. The Meldahl Project is part of AMP Inc`s power resource diversity strategy to lessen the exposure of the participating municipal utilities to the regional wholesale energy markets. AMP has participated in financing a portion of the Prairie State coal-fired generation facility and the Freemont Energy Center natural gas fired units. AMP has also issued revenue bonds (Combined Hydroelectric Project rated A2) to finance three new hydroelectric facilities along the Ohio River Cannelton (88MW); Smithland (76MW); and Willow Island (44MW). The Meldahl Project is operated by the City of Hamilton, Ohio Electric Enterprise (Electric Revenue bonds rated A3/stable), who has a 51.4% share of the output. A management committee has been established with AMP and Hamilton representation. The AMP-Hamilton agreement also provided that AMP Inc. acquire 48.6% (34MW) of Hamilton-owned Greenup hydro facility.
