Tacoma Public Utilities announcement.
Standard & Poor’s (S&P) Global Ratings has recognized Tacoma Water’s ongoing commitment to financial strength and long-range planning with an upgraded bond rating of AA+, with a stable outlook. The rating upgrade was also made on the Regional Water Supply System (RWSS) bonds. Previously rated as AA, this new rating places Tacoma Water in the top 17% of all U.S. water utilities rated by S&P. Higher credit ratings generally result in lower borrowing costs, which result in lower long-term rates for customers.
“Despite the economic, social, and environmental uncertainty that we have been all been facing in recent years, Tacoma Water was well-prepared to maintain operations and manage costs on behalf of our customers,” said Jodi Collins, financial stewardship manager for Tacoma Water. “Recognition like this ratings upgrade serves as a signal to the capital markets of the overall financial strength of Tacoma Water and the RWSS and positively reflects on our commitment to be good stewards of customer funds.”
In their rating, S&P cited many factors that contributed to Tacoma Water receiving a higher rating:
- Consistently healthy financial performance that continues to meet or exceed financial targets, including robust liquidity and strong debt service coverage,
- A substantial and diverse economic base with retail water rates that remain affordable and competitive with neighboring cities,
- Robust management and operational practices,
- A history of implementing necessary rate increases to maintain a robust financial profile,
- Governance factors that are highlighted by its credit-supportive financial and management policies,
- A formal cyber security policy and cyber insurance, and
- Well-positioned to address potential future regulatory mandates.
“With the ongoing support of our Board and Council, Tacoma Water has been able to stay the course with regular rate adjustments to support our long-range financial plan, make responsible policy adjustments over the years, maintain our focus on affordability, and generally take a proactive stance in addressing operational risks and future regulatory requirements,” said Sean Senescall, business services manager for Tacoma Water. “It’s a really nice team win to be able to bring home this upgrade for Tacoma Water’s customers, and it positions us well to continue making the right decisions even when times are tough.”
While much of the credit rating score is based on hard economic and financial numbers, strategic leadership decisions are also considered.
“This upgraded AA+ rating is a milestone for Tacoma Water and demonstrates a consistent, long-term commitment by policymakers and staff to responsible financial management,” said Scott Dewhirst, superintendent for Tacoma Water.
In their rating, S&P also noted their confidence in Tacoma Water’s financial future and the utility’s ability to continue to manage operations and make rate and other budgetary adjustments without diluting financial performance.
Read S&P’s Ratings Report here.