Tuesday, Sept. 13, 2011 • Standard and Poor’s upgrades city’s credit rating for natural gas and water bonds

Publisher’s note: This story originally appeared in the Tuesday, Sept. 13, 2011 edition of the Lassen County Times.

The city of Susanville received some good news last week, when international ratings agency Standard and Poor’s upgraded the credit ratings for the city’s water bonds and natural gas bonds.

City Administrator and Finance Director Robert Porfiri gave a summary of the recent decisions by S and P and Fitch, two of the largest credit rating companies in the world, at the Susanville City Council meeting Wednesday, Sept. 7.

“During the last few weeks, the city has undergone the first review of our original credit rating,” Porfiri said. “The credit rating is very important, because it dictates the interest rate the city is paying on the outstanding bonds, which reflects the credit risk of credit worthiness of the city.”

S and P upgraded the water bonds from an A rating to an A+, while the natural gas bond was upgraded from a BBB+ rating to an A-.

Fitch reaffirmed its original assessment of the city’s water and natural gas bonds after the city successfully refinanced the natural gas and water system in September of 2010. At the time, Fitch gave the water bond a credit rating of A- and the natural gas bond a rating of BBB-.

Porfiri said in the aftermath of S and P’s downgrading of the Federal Government’s credit rating from AAA to AA+ in August, about 11,500 municipalities had also received downgrades from the ratings company. He said it was a testament to how well the city has been able to manage both the water and natural gas funds since the two were combined and refinanced in Sept. 2010.

City Public Works Director Craig Platt said another big factor in the fund’s success came from the city’s decision back in Oct. 2009 to approve sweeping rate cuts for natural gas customers.

At the Oct. 21, 2009, the council approved the reduction of the base rate available to the average customer, a reduction from $2.60 per therm to $2.20 per therm. The city also established a welcome rate for new customers at a rate of $1.95 per therm for the first year of new service, with a commitment of two years.

“What put things in motion was the economy, the cost of propane and oil, and the council lowering the rate in 2009,” Platt said. “And by March, April and May of 2010, we were really able to put things into full swing. We started the marketing with the local media, and it’s been pretty steady.”

Platt said the Natural Gas Department has finally caught up to its six-month backlog of bringing new customers (both residential and commercial) onto the city’s natural gas system, a process that had the city bring on temporary employees just to catch up. He said since the marketing program originally started last year, he estimated more than 200 customers have come online. He said it’s the busiest he’s seen the system in the last several years.

He said the city has purchased natural gas until March of 2016, to be conservative.

As for the city’s water system, Platt said the department is getting to the point where it can finally start accepting bids for the repair and remodeling of the aging water system. He said certain parts of the city’s water infrastructure are 100 years old. He said the city’s water capital improvement fund has accumulated enough money that he and his crew are looking to begin making improvements by the start of next summer.

The other successful component Platt mentioned was the city’s established reputation of customer service involving both funds.

“We’re very proud we’ve come this far,” Platt said. “The name of the game is service, and we believe we have established a great reputation.”