TECO Energy outlook remains strong - Kansas City Business Journal:

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billion in debt held by and subsidiariesand Co. The rating is supporte by the underlying strengthof TECO’sw regulated electric and gas utility from which it derives stable cash distributions to meet its fundingt requirements, Fitch said a release. Tampa Electric continues to post stronvgcredit metrics, it maintains solid operating performance and it benefitd from Florida’s constructive regulatory environment, Fitch said. Fitch is however, about slowing custometr growth atTampa Electric. But the companyu has responded to slower growth by postponing projects to increas eelectric capacity.
Another concern for Fitch is cash flow deterioration atTECO (NYSE: TE) Guatemala becauss of the adverse rate ordedr in 2008, unplanned outagess at the San Jose plant, uncertainty over the extensionm of a purchased power agreement, and the potentialk for deferred or renegotiated contracts because of declininf market prices, higher production costs and slumpiny demand for coal. TECO Coal and TECO Guatemala provide roughly 20 percent of theparent company’z consolidated earnings before interest, taxes, depreciation and Fitch said. Credit ratios at Tampa Electric should benefif from higher base rates in 2009 and 2010 as a resuly ofa $138 milliomn rate order approved in March, Fitchg said.
In addition, an affiliated waterborne transportation agreement that reducedTampa Electric’s annual net income by $10 milliobn in prior years is expiring. Fitchj expects coverage ratios to remain relatively strong with funds from operations coveragse at nearly five timesin 2009. TECO Coal is expectefd to benefit from higher pricedd contracts signedin 2008. However, soft coal demansd and higher mining productiomn costs at TECO Coal raise the riskes ofcontractual non-performance by counter-parties and pressured margins.
Diversde regulatory orders and operating issues at the Guatemalan operationas will result in dividend distributionsa that are lower thanhistoric TECO's liquidity position is consideredc strong, Fitch said. Cash and cash equivalentws were $34.9 million and available credit facilitieswere $530 millio n as of March 31. Liquidity was enhanced by a netoperatingh loss-tax carry forward of $547.5 millionb as of Dec. 31, which is expected to resulyt in minimal cash tax paymentsthrough 2012. In TECO's $100 million note maturing in 2010 is expected to be retired withinternal cash.
Positivr rating action could result in the future from consolidate d leverage ratio reduction in 2010 and highetr cash flows from a full year of highee base rates in 2010 and effectivecost