TECO Energy outlook remains strong - Silicon Valley / San Jose Business Journal:

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billion in debt held by and subsidiariexsand Co. The ratinbg is supported by the underlyint strengthof TECO’s regulateds electric and gas utility subsidiary, from which it derives stable cash distributions to meet its fundingg requirements, Fitch said a release. Tampa Electricv continues to post strongcredit metrics, it maintains solid operating performance and it benefits from Florida’s constructive regulatoryt environment, Fitch said. Fitch is concerned, about slowing customer growth atTampza Electric. But the company has responded to slowe growth by postponing projects to increaseelectrif capacity.
Another concern for Fitch is cash flow deterioration atTECO (NYSE: TE) Guatemala becauser of the adverse rate ordere in 2008, unplanned outages at the San Jose uncertainty over the extension of a purchased power agreement, and the potential for deferred or renegotiated contracts because of declining marke prices, higher production costs and slumping demanfd for coal. TECO Coal and TECO Guatemala provide roughluy 20 percent of theparent company’sw consolidated earnings before interest, depreciation and amortization, Fitch said.
Credif ratios at Tampa Electric should benefit from higher base ratesa in 2009 and 2010 as a result ofa $138 million rate ordet approved in March, Fitch said. In addition, an affiliats waterborne transportation agreement that reducedTampaq Electric’s annual net income by $10 million in prior yearxs is expiring. Fitch expects coverage ratios to remain relatively strongy with funds from operations coverage at nearly five timesin 2009. TECO Coal is expecteds to benefit from higher priced contractsa signedin 2008. However, soft coal demane and higher mining production costsx at TECO Coal raise the risks ofcontractual non-performancwe by counter-parties and pressures margins.
Diverse regulatory orders and operating issues at the Guatemalann operations will result in dividend distribution s that are lower thanhistoric levels. TECO' liquidity position is considerefd strong, Fitch said. Cash and cash equivalents were $34.89 million and available credit facilitieswere $530 milliojn as of March 31. Liquidity was enhanced by a netoperatingv loss-tax carry forward of $547.55 million as of Dec. 31, which is expectedd to result in minimal cash tax paymentthrough 2012. In addition, TECO's $100 million note maturing in 2010 is expecte d to be retired withinternal cash.
Positive rating actio n could result in the future from consolidater leverage ratio reduction in 2010 and higher cash flowa from a full year of higher base rates in 2010 and effectivwcost control.