MID receives an upgrade in bond rating

Moody's cites utility's financial situation

jsmith@mercedsunstar.comFebruary 19, 2013 

Moody's Investor Services has upgraded the Merced Irrigation District's rating for several infrastructure improvement bonds, representing $13.2 million in debt.

The MID's 2003 electric service bond rating has been changed to Baa2 from Baa3.

The district provides electrical service to 6,000 residences and 1,500 businesses.

The upgrade, officials said, shows the district's improving financial situation.

"Ensuring a strong and healthy financial plan for the district remains a top priority," said MID General Manager John Sweigard. "In the past couple years, we have put in place tighter controls, improved our policies, increased our reserves and increased transparency."

The upgrade reduces costs associated with selling and refinancing bonds, which will benefit ratepayers, Sweigard added. "Refinancing is important and we'll be looking for opportunities as they come, which will save us interest over the long run of the debt."

As reason for the improved rating, Moody's cited the MID's "competitive market position" for providing electricity in an agricultural and "economically challenged" area of Merced.

The MID has seen "improving financial performance" while significantly increasing its cash on hand over the past two years, according to a Moody's document.

"We will continue to do all we can to protect our finances and do the right thing for MID ratepayers," said MID Director of Finance Brian Stubbert. "We are committed to increasing our bond rating even further as we move forward."

Moody's also identified several challenges to the MID's rate standing, including a reliance on a concentration of 10 large power customers, with nearly 30 percent of all electrical revenue coming from two of them.

Reporter Joshua Emerson Smith can be reached at (209) 385-2486 or jsmith@mercedsunstar.com.

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