EPB has maintained its top financial grade from Fitch Ratings Service, which said the city-owned utility has "a very low operating cost burden" and "very low relatively stable" debt.
In a new assessment of EPB's financial standing released last week, Fitch analyst Rebecca Meyer reaffirmed the agency's AA+ bond rating on $246.5 million of EPB's debt even though a recent Comptroller audit by the state of Tennessee urged the utility to "take necessary steps to ensure the deficit" in a year-end electric account of nearly $14 million is addressed.
EPB spokesman J. Ed Marston said the year-end deficit referenced by the state Comptroller "is a result of the electric system utilizing existing cash for our capital expenditures for electric infrastructure instead of incurring additional debt to fund them."
"This situation is unique in our industry as most utilities do not have a fiber optics system that is paying cash into their electric system," Marston said. "Because our fiber system pays access fees and allocations to the electric system, we have been able to keep electric rates lower and reduce our need to borrow from the bond market."
The Fitch rating maintained the top rating for EPB for the second time since 2017.
"The rating reflects Fitch's expectation for EPB to maintain financial stability through a moderate stress scenario," Meyer said.
Fitch forecasts that EPB electric sales will remain flat as energy conservation measures and efficiencies offset new growth in buildings and electric vehicles. EPB plans to spend $279 million over the next five years to maintain and upgrade its electric system.
Although Fitch's analysis focused solely on EPB's electric division, the rating agency acknowledged the value of the community-wide fiber optic network which also provides internet, video and phone service to moree than 105,000 customers.
"The local economy has also become increasingly diverse, with a growing technology sector supported by EPB's fiber infrastructure," the Fitch report said, noting that the smart grid has cut outages by 55%.
"We've been able to keep EPB electric rates level since 2015 and defer the need to borrow from the bond market while continuing to invest in infrastructure," EPB Chief Financial Officer Greg Eaves said. "Most importantly, our customers have ranked EPB as 'J.D. Power's Best Mid-sized Utility in the South' for customer satisfaction for the last four years."
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.