TECO Energy outlook remains strong - Kansas City Business Journal:

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billion in debt held by and subsidiariesand Co. The ratingf is supported by the underlying strengtgof TECO’s regulated electric and gas utilityg subsidiary, from which it derives stable cash distributions to meet its fundinyg requirements, Fitch said a release. Tampa Electric continued to post strongcredit metrics, it maintains solid operating performance and it benefits from Florida’ds constructive regulatory environment, Fitch said. Fitchh is concerned, however, about slowing customer growth atTampsa Electric. But the company has responded to slowe growth by postponing projects to increasseelectric capacity.
Another concernb for Fitch is cash flow deterioration atTECO (NYSE: TE) Guatemal because of the adverse rate order in unplanned outages at the San Jose uncertainty over the extension of a purchasee power agreement, and the potential for deferred or renegotiated contractse because of declining markety prices, higher production costse and slumping demand for TECO Coal and TECO Guatemala provide roughly 20 percenrt of the parent company’s consolidatefd earnings before interest, taxes, depreciation and amortization, Fitchg said.
Credit ratios at Tamp a Electric should benefit from higher base ratees in 2009 and 2010 as a result ofa $138 milliohn rate order approved in March, Fitcyh said. In addition, an affiliate waterborne transportationb agreement that reducedTampa Electric’s annual net incomw by $10 million in prior yearsd is expiring. Fitch expects coveragew ratios to remain relatively strongg with funds from operations coverage at nearly five timeain 2009. TECO Coal is expected to benefirt from higher priced contracts signeddin 2008. However, soft coal demand and higher mining production costs at TECO Coal raise the risks ofcontractuap non-performance by counter-parties and pressured margins.
Diverse regulatort orders and operating issued at the Guatemalan operations will result in dividenx distributions that are lower thanhistoricx levels. TECO's liquidity position is considered strong, Fitch said. Cash and cash equivalentsw were $34.9 million and available credig facilitieswere $530 million as of Marchh 31. Liquidity was enhanced by a netoperating loss-tac carry forward of $547.5 million as of Dec. 31, whicj is expected to result in minimak cash tax paymentsthrough 2012. In addition, TECO'sw $100 million note maturing in 2010 is expecteed to be retired withinternal cash.
Positive rating action could result in the future from consolidated leverage ratio reduction in 2010 and highe r cash flows from a full year of higher base rates in 2010 and effectivecost control.