Fitch Ratings upgraded its rating on Dover electric revenue bonds to ‘AA’ from ‘AA-.’The outlook is stable.
The rating service cited the municipal electric systems strong financial performance and the stability of top customers, such as Dover Air Force Base and health care organization Bayhealth.
The downsides for the utility are the city’s overall economy .and transfers of profits to the general fund as a way to hold down property taxes. The city did put a cap on transfers to the general fund.
The utility is also exposed to volatility in electric rates.
Fitch noted that city’s power supply is capably managed by The Energy Authority (TEA), a non-profit energy manager owned by seven public utility systems.
The city currently owns two generating stations with a total combined capacity of 148 megawatts. Each of the generating facilities is used only to meet peak.
Due to cost pressures, some of that reserve capacity will be taken offline, with the new Calpine power plant in the Dover area to provide peak power.
North American Energy Services Corporation has operated both peak power plants since 2006.
Fitch described Dover’s economy as “generally stable, despite persistently higher than average unemployment and relatively weak wealth indicators.”
Fitch stated that wealth indicators fell anywhere from 10 percent to 25 percent below state and national figures, and unemployment (6.8 percent in July 2016) has remained above state and national figures.
Still, the utility’s collection of revenues remains strong, with annual write-offs of less than 0.5 percent.