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Moody Upgrades Old Dominion Electric Cooperative’s Rating, Changes Outlook to Stable

January 13, 2014

Glen Allen, VA – Moody’s Investors Service upgraded Old Dominion Electric Cooperative’s (ODEC) senior secured debt ratings to A2 from A3 and revised the cooperative’s rating outlook to stable from positive.

According to Kevin Rose, Vice President-Senior Analyst at Moody’s, “The rating action takes into account ODEC’s consistent trend of maintaining sound credit metrics and ample liquidity, which provides a strong financial foundation as the cooperative undertakes construction of a 1,000 megawatt gas-fired generation plant. Although ODEC’s financial metrics will be pressured by debt financing of its planned construction of the Wildcat Point generating plant, we believe the financially sound starting point will allow ODEC to absorb a temporary decline in financial performance and return the metrics to levels within the A category range under our Rating Methodology once the asset is placed into service in mid-2017.”

The stable rating outlook reflects the relative consistency and strength of ODEC’s annual net margins, cash flows and credit metrics, as well as certain operational, business and rate flexibility provided by the electric G&T cooperative structure. The outlook also assumes that ODEC will be able to absorb temporary pressure on its key credit metrics as it relies on debt financing of its elevated capital program to add owned generation capacity and reduce dependence on purchase power agreements over the next several years. To that end, Moody’s has incorporated a view that ODEC will maintain ample access to long-term capital and multi-year liquidity on a consistent basis.

“We have always been, and remain, dedicated to strengthening ODEC’s financial condition so that we can provide low-cost power for our member-owners,” said Bob Kees, ODEC’s senior vice president and CFO. Kees added, “Since we first received our A3 rating from Moody’s in 1992, we’ve tripled our equity ratio while building multiple power plants. It’s extremely rewarding to earn this upgrade which we see as an acknowledgement of years of hard work and consistent performance.”

ODEC has credit ratings from three agencies. In addition to its A3 (stable outlook) rating from Moody’s, ODEC has a secured credit rating of A (stable outlook) from both Standard and Poor’s and Fitch Ratings. ODEC also has an issuer credit rating of A (stable outlook) from Standard and Poor’s. Each rating agency has its own ratings criteria and ranking system.

The rating upgrade and outlook revision were announced in a Moody’s press release issued to financial media outlets on December 18.

View official press release: Moody Upgrades Old Dominion Electric Cooperative’s Rating, Changes Outlook to Stable