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CPS Energy is still saddled with major debt following last February's devastating freeze.
Days after winning a rate increase that it said was needed to stave off damage to its credit rating, CPS Energy nonetheless had its rating downgraded Monday by Moody's Investors Services
Moody's dropped CPS's rating by one category based on the massive fuel charges it racked up during last February's Winter Storm Uri. The downgrade affects a combined $5.6 billion in outstanding debt, significant because the lower an entity's credit rating, the more it must pay to borrow money.
However, Moody's also noted in its report that the publicly owned utility faces better prospects than it did last fall due in part to the 3.85% rate increase San Antonio City Council approved on Jan. 13
. As a result, the utility's outlook jumped from "negative" to "stable."
When trying to convince council to approve its rate increase amid a crisis of customer confidence, CPS officials said the move was needed to protect its credit rating.
At issue in the Moody's downgrade is hundreds of millions in debt CPS was stuck with following Uri, one of the state's largest-ever natural disasters. Some $587 million of that debt is still in dispute with energy suppliers, Moody's notes.
Last year, the major rating agencies Fitch and S&P Global Ratings also dropped CPS Energy’s ratings in Uri's wake.
Moody's report also notes that the state of Texas has done little to fix problems with its power grid since the devastating freeze, which its analysts "considered in our assessment of environmental risk."
In comments to the Express-News
, CPS Chief Financial Officer Cory Kuchinksy said Moody’s downgrade put CPS’ ratings in line with utilities of comparable size.
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