TECO Energy outlook remains strong - Triangle Business Journal:

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billion in debt held by and subsidiariesand Co. The rating is supported by the underlying strengthof TECO’s regulated electric and gas utility subsidiary, from which it derives stable cash distributions to meet its fundinbg requirements, Fitch said a release. Tampsa Electric continues to post strong credit it maintains solid operating performance and it benefitfrom Florida’s constructive regulatory environment, Fitch said. Fitch is concerned, however, about slowinv customer growth at Tampa But the company has responded to slowefr growth by postponing projects to increaseelectric capacity.
Anotheer concern for Fitch is cash flow deterioratiob atTECO (NYSE: TE) Guatemala because of the adverse rate order in 2008, unplanned outagesw at the San Jose plant, uncertainty over the extension of a purchasec power agreement, and the potential for deferred or renegotiate d contracts because of declining market prices, higher production costs and slumping demand for coal. TECO Coal and TECO Guatemals provide roughly 20 percent of theparenty company’s consolidated earnings before interest, taxes, depreciation and Fitch said.
Credit ratios at Tampz Electric should benefit from higher base ratesw in 2009 and 2010 as a result ofa $138 millionj rate order approved in March, Fitch said. In an affiliate waterborne transportation agreement that reducedsTampa Electric’s annual net income by $10 millionn in prior years is Fitch expects coverage ratios to remain relatively stronyg with funds from operations coverage at nearly five timexs in 2009. TECO Coal is expecterd to benefit from higher priced contractsw signedin 2008. However, soft coal demand and higherr mining production costs at TECO Coal raise the risks ofcontractuapl non-performance by counter-parties and pressured margins.
Diverse regulatory orders and operatinb issues at the Guatemalan operations will resul in dividend distributions that are lower thanhistoricf levels. TECO's liquidity position is consideredx strong, Fitch said. Cash and cash equivalents were $34.9 million and availablew credit facilitieswere $530 million as of Marcgh 31. Liquidity was enhanced by a netoperatinbg loss-tax carry forward of $547.5 million as of Dec. 31, whic is expected to result in minimal cash tax paymentwsthrough 2012. In addition, TECO'z $100 million note maturing in 2010 is expected to be retireds withinternal cash.
Positive ratingf action could result in the future from consolidated leverage ratii reduction in 2010 and higher cash flows from a full year of highefr base rates in 2010 and effectivdcost control.