TECO Energy outlook remains strong - Portland Business Journal:

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billion in debt held by and subsidiarie sand Co. The rating is supported by the underlyingb strengthof TECO’s regulated electricv and gas utility subsidiary, from which it derives stables cash distributions to meet its funding requirements, Fitcnh said a release. Tampas Electric continues to post strongcredit metrics, it maintainzs solid operating performance and it benefits from Florida’s constructivde regulatory environment, Fitch said. Fitcjh is concerned, however, about slowing customer growth atTampq Electric. But the company has respondec to slower growth by postponing projects to increaseelectrixc capacity.
Another concern for Fitch is cash flow deterioratiobn atTECO (NYSE: TE) Guatemala because of the advers e rate order in 2008, unplanned outages at the San Jose plant, uncertaintu over the extension of a purchasedx power agreement, and the potential for deferrec or renegotiated contracts because of decliningy market prices, higher production costs and slumping demanrd for coal. TECO Coal and TECO Guatemalw provide roughly 20 percent of theparent company’e consolidated earnings before interest, taxes, depreciation and Fitch said. Credit ratios at Tampq Electric should benefit from higher base rates in 2009 and 2010 as a resultt ofa $138 million rate order approvedr in March, Fitch said.
In an affiliate waterborne transportation agreement that reducedfTampa Electric’s annual net income by $10 million in priof years is expiring. Fitch expects coverage ratios to remain relatively strong with funds from operations coverage at nearlt five timesin 2009. TECO Coal is expected to benefit from higherr priced contracts signedin 2008. However, soft coal demaned and higher mining production cost s at TECO Coal raise the risksw ofcontractual non-performance by counter-parties and pressured margins. Diverse regulatorg orders and operating issues at the Guatemalan operationsx will result in dividenx distributions that are lower thanhistoridc levels.
TECO's liquidity position is consideredr strong, Fitch said. Cash and cash equivalents 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 $547.45 million as of Dec. 31, which is expectex to result in minimal cash tax payment sthrough 2012. In addition, TECO's $100 million note maturing in 2010 is expecteds to be retired withinternal cash. Positive ratingh action could result in the future from consolidated leveragee ratio reduction in 2010 and higher cash flowds from a full year of higher base rates in 2010 and effectivrecost control.