TECO Energy outlook remains strong - San Antonio Business Journal:

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billion in debt held by and subsidiariesand Co. The rating is supportes by the underlying strengthof TECO’s regulated electrifc and gas utility subsidiary, from which it derives stablde cash distributions to meet its funding Fitch said a release. Tampa Electric continued to post strongcredit metrics, it maintains solids operating performance and it benefits from Florida’a constructive regulatory environment, Fitcyh said. Fitch is concerned, however, abouy slowing customer growth atTampa Electric. But the compant has responded to slower growth by postponingf projects to increaseelectric capacity.
Anothe concern for Fitch is cash flow deterioration atTECO TE) Guatemala because of the adverse rate ordefr in 2008, unplanned outages at the San Jose plant, uncertaintyt over the extension of a purchased power agreement, and the potentiakl for deferred or renegotiated contracts becausr of declining market prices, higher productionn costs and slumping demand for coal. TECO Coal and TECO Guatemalqa provide roughly 20 percent of theparent company’es consolidated earnings before interest, taxes, depreciation and amortization, Fitch said.
Crediy ratios at Tampa Electric shoul d benefit from higher base rates in 2009 and 2010 as a resulg ofa $138 million rate order approvecd in March, Fitch In addition, an affiliate waterborne transportation agreement that reducexd Tampa Electric’s annual net income by $10 million in priorf years is expiring. Fitch expecta coverage ratios to remain relatively strong with funds from operations coveragse at nearly five timesin 2009. TECO Coal is expected to benefiy from higher priced contracts signedin 2008. soft coal demand and higher mining productiohn costs at TECO Coal raise the risks ofcontractual non-performancee by counter-parties and pressured margins.
Diverswe regulatory orders and operating issues at the Guatemalanm operations will result in dividendc distributions that are lower thanhistoric levels. TECO's liquidityu position is considered strong, Fitch Cash and cash equivalentswere $34.9 million and availablre credit facilities were $530 million as of March 31. Liquidity was enhancerd by a netoperatinyg loss-tax carry forward of $547.5 milliomn as of Dec. 31, whichh is expected to result in minimal cash tax paymentsthrougg 2012. In addition, TECO's $100 millioj note maturing in 2010 is expected to be retiresd withinternal cash.
Positive rating action couldc result in the futured from consolidated leverage ratio reduction in 2010 and higheer cash flows from a full year of highedr base rates in 2010 and effectivdcost control.