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PPS GM 'Encouraged' by Moody's Bond Rating Downgrade

Paducah Power System

  Moody’s Investor Service has downgraded Paducah Power System’s revenue bond rating, but the beleaguered utility says the new rating is an improvement over a December downgrade from Fitch Ratings.

The new rating from Moody’s - "Baa1" - reflects a medium-grade rating and a moderate credit risk.

“The Moody’s adjustment is not a surprise, given our financial metrics,” said new PPS general manager Gary Zheng in a news release.  “However, we’re very encouraged by Moody’s confidence in our recovery plan and their willingness to keep us at an investment grade rating.  Of all the possible decisions by Moody’s, this was one of the more positive outcomes we could have achieved under our current circumstances.”

Zheng also attributes the new rating to the improved performance of its major investment, the Prairie State Energy Campus. PPS rates skyrocketed after it cut ties with the Tennessee Valley Authority and invested millions in the troubled coal-fired power plant. 

As part of the recovery plan, PPS is replacing debt service reserve funds with surety bonds and has hired a new portfolio manager to better manage power sales and purchases.  The plan’s goal is to stabilize PPS finances and save nearly $5 million this fiscal year in order to provide rate relief for customers by July 1.

John Null is the host and creator of Left of the Dial. From 2013-2016, he also served as a reporter in the WKMS newsroom.
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