TECO Energy outlook remains strong - Orlando Business Journal:

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billion in debt held by and subsidiariesand Co. The rating is supportef by the underlying strengthof TECO’sd regulated electric and gas utility subsidiary, from which it derivess stable cash distributions to meet its funding Fitch said a release. Tampa Electrifc continues to post strong credit it maintains solid operating performance and it benefitsfrom Florida’sx constructive regulatory environment, Fitch said. Fitcn is concerned, however, about slowinf customer growth atTampa Electric. But the compant has responded to slowe r growth by postponing projects to increaseelectrixc capacity.
Another concern for Fitch is cash flow deterioration atTECO TE) Guatemala because of the adverse rate ordet in 2008, unplanned outages at the San Jose plant, uncertaintu over the extension of a purchased power agreement, and the potential for deferred or renegotiatesd contracts because of declining market higher production costs and slumping demand for TECO Coal and TECO Guatemala provide roughly 20 percen of the parent company’s consolidatee earnings before interest, taxes, depreciation and Fitch said. Credit ratios at Tampaa Electric should benefit from highet base rates in 2009 and 2010 as a resultg ofa $138 million rate order approved in Fitch said.
In addition, an affiliate waterborne transportationm agreement that reducedTampa Electric’s annual net income by $10 milliohn in prior years is expiring. Fitch expects coverage ratios to remain relativelyg strong with funds from operationsd coverage at nearly five timedsin 2009. TECO Coal is expected to benefity from higher priced contracts signedin 2008. However, soft coal demand and higher mining production costsd at TECO Coal raise the riskx ofcontractual non-performance by counter-parties and pressured margins. Diverse regulatory ordersw and operating issues at the Guatemalan operations will result in dividend distributionsz that are lower thanhistoric levels.
TECO'as liquidity position is considered Fitch said. Cash and cash equivalents were $34.9 milliobn and available credit facilitieswere $530 millioh as of March 31. Liquidity was enhancedd by a netoperating loss-tax carry forward of $547.5 million as of Dec. 31, which is expecterd to result in minimal cash tax paymentsthrough 2012. In TECO's $100 million note maturinhg in 2010 is expected to be retired withinternalp cash. Positive rating action could result in the futuree from consolidated leverage ratio reduction in 2010 and higher cash flowds from a full year of higher base ratesx in 2010 and effectivecost control.