Moody’s upgrades JEA bond ratings, calls utility’s financial outlook stable

The New York-based agency said the legal settlement over nuclear Plant Vogtle and the change in leadership drove its decision.

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Moody’s Investor Services upgraded JEA’s bond rating and financial outlook after the utility and city settled a lawsuit over a purchase power agreement for the nuclear Plant Vogtle.

The New York-based rating agency announced Sept. 28 it upgraded JEA’s water and wastewater system senior bond ratings to Aa3 from A2 and the district energy chilled water system bond rating to A1 from A3.

The report gives JEA a stable financial outlook.

Moody’s said JEA and the city’s Aug. 13 settlement accepting a U.S. District Court ruling in favor of the Municipal Electric Authority of Georgia is the major driver for the water and sewer senior and subordinated debt upgrade.

JEA had been trying to get out a 20-year purchase power agreement with MEAG, which requires the Jacksonville utility to buy energy from the Georgia-based power plant and to pay each year for some of the debt for the ongoing construction cost. Those payments could be as much as $123 million per year.

“The ratings also reflect strong debt service coverage of both senior and subordinate debt, a large and diverse service area, a moderate debt load, low but adequate cash levels for the rating category and adequate legal protections for bondholders,” Moody’s said in its rating action.

Moody’s began reviewing JEA’s bond rating Aug. 10, according to its statement.

The rating agency also took into account changes to JEA’s executive-level management after an attempt to sell the utility in 2019 to a private company resulted in a new senior leadership team, CEO and board of directors. 

JEA’s invitation to negotiate with private utility companies led to a federal grand jury investigation and City Council and city Office of Inspector General inquiries. 

“Governance is a driver of the upgrades, because of the turnover of management originally responsible for the litigation and a failed attempt to privatize the utility with a new senior management team,” Moody’s said in the report. 

Moody’s also cited the firing of former CEO and Managing Director Aaron Zahn on Jan. 28 and CFO Ryan Wannemacher on Dec. 27. 

The board fired former Interim CEO Melissa Dykes on April 28. Her replacement, Paul McElroy, fired the remaining nine senior executives July 14. 

JEA has more than $1.3 billion in debt between its water, wastewater and energy systems. The utility said in a news release Sept. 29 that the improved bond ratings will lower JEA’s future borrowing costs for capital improvement projects.

“These bond upgrades from Moody’s signal a renewed confidence in JEA’s new board, senior leadership team, and employees,” McElroy, JEA interim managing director and CEO, said in a news release. 

“We will continue with our efforts to move JEA forward to set a positive financial course for the future of JEA and its customers,” he said.




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