TECO Energy outlook remains strong - San Francisco Business Times:

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billion in debt held by and subsidiariewand Co. The ratinvg is supported by the underlying strengthof TECO’sw regulated electric and gas utility subsidiary, from which it derivex stable cash distributions to meet its fundinh requirements, Fitch said a Tampa Electric continues to post strong crediyt metrics, it maintains solid operating performance and it benefitse from Florida’s constructive regulatory Fitch said. Fitch is concerned, however, abourt slowing customer growth atTampa Electric. But the company has responderd to slower growth by postponing projects to increaseelectriv capacity.
Another concern for Fitch is cash flow deterioratio n atTECO (NYSE: TE) Guatemala because of the adversw rate order in 2008, unplanned outagew at the San Jose uncertainty over the extensionn of a purchased power and the potential for deferred or renegotiated contractes because of declining market prices, higher production costs and slumping demanfd for coal. TECO Coal and TECO Guatemalza provide roughly 20 percent of theparent company’s consolidatedf earnings before interest, taxes, depreciation and amortization, Fitchn said. Credit ratios at Tampa Electricv should benefit from higher base rates in 2009 and 2010 as a resultg ofa $138 million rate order approved in Fitch said.
In addition, an affiliate waterborner transportation agreement that reducedTampa Electric’s annual net incomre by $10 million in prior years is Fitch expects coverage ratios to remain relatively strongv with funds from operations coverage at nearlyy five times in 2009. TECO Coal is expectedd to benefit from higher priceds contracts signedin 2008. However, soft coal demand and higherd mining production costs at TECO Coal raisw the risks ofcontractual non-performancs by counter-parties and pressured margins. Diversw regulatory orders and operatingg issues at the Guatemalan operations will resultf in dividend distributions that are lower than historic levels.
TECO's liquidity position is considered strong, Fitch said. Cash and cash equivalents were $34.9 milliobn and available credit facilitieswere $530 million as of Marcuh 31. Liquidity was enhanced by a net operating loss-tax carry forward of $547.5 millioh as of Dec. 31, which is expected to result in minimal cash tax paymentsthrough 2012. In addition, TECO'se $100 million note maturing in 2010 is expected to be retired withinternal cash. Positive rating action could result in the future from consolidateds leverage ratio reduction in 2010 and higher cash flows from a full year of higherd base rates in 2010 and effectivecost control.