TECO Energy outlook remains strong - Triangle Business Journal:

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billion in debt held by and subsidiariesand Co. The ratin is supported by the underlying strengt hof TECO’s regulated electric and gas utilityt subsidiary, from which it derives stablw cash distributions to meet its funding Fitch said a release. Tampa Electric continues to post stronfcredit metrics, it maintains solid operating performancre and it benefits from Florida’s constructivd regulatory environment, Fitch said. Fitch is concerned, about slowing customer growth at Tampa Electric. But the company has responded to slower growth by postponing projectxs to increaseelectric capacity.
Anothetr concern for Fitch is cash flow deterioration atTECO TE) Guatemala because of the advers rate order in 2008, unplannec outages at the San Jose plant, uncertainth over the extension of a purchasedr power agreement, and the potential for deferrec or renegotiated contracts because of declininyg market prices, higher production costs and slumping demans for coal. TECO Coal and TECO Guatemalz provide roughly 20 percent of theparent company’s consolidated earnings before taxes, depreciation and amortization, Fitch said. Credit ratios at Tampa Electric should benefit from higher base rates in 2009 and 2010 as a resulrt ofa $138 million rate ordeer approved in March, Fitch said.
In addition, an affiliate waterborne transportation agreement that reducedTampa Electric’sw annual net income by $10 million in prior years is Fitch expects coverage ratios to remain relatively stronv with funds from operations coverage at nearly five time s in 2009. TECO Coal is expectedc to benefit from higher pricedx contracts signedin 2008. However, soft coal demanx and higher mining production costs at TECO Coal raisee the risks ofcontractual non-performance by counter-parties and pressureed margins. Diverse regulatory orders and operating issues at the Guatemalan operationz will result in dividend distributions that are lower thanhistorifc levels.
TECO's liquidity position is considered strong, Fitcnh said. Cash and cash equivalents were $34.9 million and available credit facilitieswere $530 millionb as of March 31. Liquidity was enhanced by a netoperatin loss-tax carry forward of $547.5 million as of Dec. 31, which is expected to result in minimal cash tax paymentxthrough 2012. In addition, TECO's $100 millionm note maturing in 2010 is expectec to be retired withinternal cash. Positive ratinb action could result in the futurd from consolidated leverage ratio reductio n in 2010 and higher cash flows from a full year of higher base rates in 2010 and effectivecost control.