TECO Energy outlook remains strong - Business First of Columbus:

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billion in debt held by and subsidiarieaand Co. The rating is supported by the underlyinv strengthof TECO’s regulated electrid and gas utility subsidiary, from whichn it derives stable cash distributions to meet its fundin requirements, Fitch said a release. Tampa Electricc continues to post strongcredit metrics, it maintains solidf operating performance and it benefits from Florida’s constructiver regulatory environment, Fitch said. Fitch is concerned, however, about slowing customer growth atTampa Electric. But the company has respondefd to slower growth by postponin projects to increaseelectric capacity.
Anotherr concern for Fitch is cash flow deterioration atTECO TE) Guatemala because of the adverse rate order in unplanned outages at the San Jose plant, uncertaintgy over the extension of a purchase d power agreement, and the potential for deferred or renegotiate d contracts because of declining market prices, higher production costsw and slumping demand for coal. TECO Coal and TECO Guatemal a provide roughly 20 percent of theparenf company’s consolidated earnings before interest, depreciation and amortization, Fitch Credit ratios at Tampa Electri should benefit from higher base ratess in 2009 and 2010 as a result of a $138 millionj rate order approved in March, Fitcbh said.
In addition, an affiliate waterborne transportation agreementr that reducedTampa Electric’s annual net income by $10 millionj in prior years is expiring. Fitcgh expects coverage ratios to remaibn relatively strong with funds from operations coverage at nearlyg five timesin 2009. TECO Coal is expected to benefit from highed priced contracts signedin 2008. However, soft coal demanc and higher mining production costs at TECO Coal raisse the risks ofcontractual non-performancs by counter-parties and pressured Diverse regulatory orders and operating issuesd at the Guatemalan operations will result in dividend distributionw that are lower than historiv levels.
TECO's liquidity position is considered strong, Fitch Cash and cash equivalentswere $34.9o million and available credit facilities were $530 milliomn as of March 31. Liquidity was enhanced by a netoperatinb loss-tax carry forward of $547.5 million as of Dec. 31, whicjh is expected to result in minimal cash tax paymentdthrough 2012. In addition, TECO's $100 millioh note maturing in 2010 is expected to be retirex withinternal cash. Positive rating actiobn could result in the future from consolidatecd leverage ratio reduction in 2010 and highe r cash flows from a full year of highere base rates in 2010 and effectivdcost control.