TECO Energy outlook remains strong - Minneapolis / St. Paul Business Journal:

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billion in debt held by and subsidiariesdand Co. The rating is supported by the underlyinyg strengthof TECO’s regulatef electric and gas utilitgy subsidiary, from which it derivesx stable cash distributions to meet its funding Fitch said a release. Tampa Electric continue s to post strongcredit metrics, it maintains solid operating performance and it benefitse from Florida’s constructive regulatory environment, Fitch Fitch is concerned, however, about slowing customerr growth at Tampa Electric. But the company has respondesd to slower growth by postponing projectss to increaseelectric capacity.
Another concernh for Fitch is cash flow deterioration atTECO (NYSE: TE) Guatemala because of the adverse rate order in unplanned outages at the San Jose uncertainty over the extension of a purchasefd power agreement, and the potential for deferree or renegotiated contracts because of declining market higher production costs and slumping demand for coal. TECO Coal and TECO Guatemal provide roughly 20 percent of theparen company’s consolidated earnings before interest, taxes, depreciationh and amortization, Fitch said.
Credit ratios at Tampa Electridc should benefit from higher base rates in 2009 and 2010 as a resulyt ofa $138 million rate order approver in March, Fitch In addition, an affiliate waterborne transportatio n agreement that reduced Tampa Electric’s annuakl net income by $10 million in prior yeara is expiring. Fitch expects coverage ratios to remain relativelh strong with funds from operations coveragwe at nearly five timesin 2009. TECO Coal is expectef to benefit from higher priced contracts signedin 2008. soft coal demand and higher mining production costs at TECO Coal raisw the risks ofcontractual non-performance by counter-partiex and pressured margins.
Diversed regulatory orders and operating issues at the Guatemalanh operations will result in dividend distributions that are lowerf thanhistoric levels. TECO's liquidity position is considered Fitch said. Cash and cash equivalents were $34.9 million and availables credit facilitieswere $530 millioh as of March 31. Liquidity was enhancedf by a netoperating loss-tadx carry forward of $547.5 million as of Dec. 31, which is expectes to result in minima cash tax paymentsthrough 2012. In TECO's $100 million note maturing in 2010 is expected to be retiredx withinternal cash.
Positive rating action could result in the future from consolidated leverage ratio reduction in 2010 and higherf cash flows from a full year of higher base rateds in 2010 and effectivecost control.