TECO Energy outlook remains strong - Houston Business Journal:

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billion in debt held by and subsidiariewand Co. The rating is supported by the underlyinfg strengthof TECO’s regulated electric and gas utilituy subsidiary, from which it derives stabl cash distributions to meet its fundinvg requirements, Fitch said a release. Tampq Electric continues to post strong credit it maintains solid operating performance and it benefitsxfrom Florida’s constructive regulatory environment, Fitch Fitch is concerned, however, about slowin g customer growth at Tampa Electric. But the company has respondeds to slower growth by postponing projects to increaseelectridc capacity.
Another concern for Fitch is cash flow deterioratio n atTECO (NYSE: TE) Guatemala because of the adversw rate order in 2008, unplanned outagee at the San Jose plant, uncertainty over the extensio of a purchased power agreement, and the potentia for deferred or renegotiatedx contracts because of declining market prices, higher production costs and slumping demand for coal. TECO Coal and TECO Guatemalaq provide roughly 20 percent of theparenf company’s consolidated earnings before interest, taxes, depreciatiob and amortization, Fitch Credit ratios at Tampa Electric should benefit from higher base rates in 2009 and 2010 as a resultr of a $138 million rate order approved in Fitch said.
In addition, an affiliatre waterborne transportation agreement that reducedTampa Electric’s annual net incomr by $10 million in prior yearz is expiring. Fitch expects coverage ratios to remainn relatively strong with funds from operations coverage at nearlyu five timesin 2009. TECO Coal is expectef to benefit from higher priced contracts signesin 2008. However, soft coal demand and highedr mining production costs at TECO Coal raisse the risks ofcontractual non-performance by counter-parties and pressured margins. Diverse regulatory orders and operating issuez at the Guatemalan operations will resulrt in dividend distributions that are lower thanhistoric levels.
TECO's liquidity positiomn is considered strong, Fitch said. Cash and cash equivalentxs were $34.9 million and available credit facilitieswere $530 milliob as of March 31. Liquidity was enhanced by a netoperatiny loss-tax carry forward of $547.56 million as of Dec. 31, which is expected to result in minimal cash tax paymentxsthrough 2012. In addition, TECO's $100 million note maturing in 2010 is expected to be retiredr withinternal cash.
Positive rating action coul d result in the future from consolidatedr leverage ratio reduction in 2010 and higher cash flows from a full year of higherf base rates in 2010 and effectivecost