TEXT - Fitch rates South Carolina Public Service Auth.

Wed Nov 21, 2012 1:45pm EST

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Nov 21 - Fitch Ratings assigns an 'F1+' rating to South Carolina Public
Service Authority's (Santee Cooper) $200,000,000 revenue notes:
consisting of commercial paper (CP) notes tax-exempt series D and E; and taxable
CP notes series DD and EE (the notes). 

Goldman Sachs & Co., J.P Morgan Securities LLC, Wells Fargo Securities, LLC and 
Barclays Bank PLC will serve as commercial paper dealers for the offering.

In addition, Fitch affirms the 'F1+' rating on the following outstanding notes:

--$250 million CP notes series A and AA; 
--$150 million CP notes series B and BB;
--$100 million CP notes series C and CC .

PROCEEDS

Proceeds will be used to fund capital expenditures, relating to two new units 
under construction at the Summer nuclear facility, and for other system outlays.


SECURITY 

The notes (both outstanding and to be issued) are secured by a lien upon and 
pledge of revenues junior to the lien and pledge securing: i) revenue 
obligations, ii) expenses of operating and maintaining the system and iii) 
payments into the lease fund, but prior to the payments into the capital 
improvement fund. 

KEY RATING DRIVERS

SIGNIFICANT LIQUIDITY: The 'F1+' rating on the CP notes (tax-exempt series D and
E and taxable series DD and EE) is based on both internal liquidity support of 
Santee Cooper, which is obligated to pay interest due on any or all maturing 
notes and two separate Revolving Credit Agreements (RCAs), if needed, to repay 
the maturing principal of the notes. The RCAs, each totaling $100,000,000, 
expire on Nov. 27, 2015, and are with Barclays Bank PLC (Barclays) and TD Bank, 
N.A. (TD). 

CRITERIA FOR 'F1+' RATING ACHIEVED: Santee Cooper has successfully met Fitch's 
Short-Term Rating Criteria for Internal Liquidity based upon: the utility's 
long-term debt rating of 'AA-', a reasonable liquidation procedures plan, and 
available liquid resources equal to at least 125% of maximum liquidity 
requirement.

LARGE AND DIVERSIFIED WHOLESALE SYSTEM: Santee Cooper is one of the nation's 
largest municipal electric systems, serving either directly or indirectly 
(through Central Electric Cooperative), nearly one-third of the state of South 
Carolina.  

 

CREDIT PROFILE

Santee Cooper has a long history of selling electricity to customers throughout 
South Carolina. The authority owns and operates various power resources, with a 
combined generating capacity of 5,651 megawatts. Coal generation accounts for 
the largest component of the energy resource mix (70%), with nuclear power 
contributing 5.6%. 

Santee Cooper is participating in the construction of the V.C. Summer units No. 
2 and No. 3, which are expected to be commercial operable in March 2017 and May 
2018, respectively. Capital expenditures for the years 2013 through 2015 are 
estimated at  $3.469  billion with nuclear accounting for $2.635 billion (based 
on 45% ownership).

FINANCIAL

Santee Cooper financial ratios have declined in recent years, reflecting slower 
growth in sales, higher operating costs, and expenses associated with the 
development of new units at the nuclear project. Future ratios are projected to 
remain stable, but at lower levels than historically achieved. These concerns 
were incorporated in Fitch's downgrade of Santee Cooper's long-term rating from 
'AA' to 'AA- in January 2012.

COMMERCIAL PAPER PROGRAM

Santee Cooper expects to maintain about $300 million of CP outstanding. During 
the construction of Summer Nuclear units No.2 and No.3, outstanding amounts 
could reach $600 million, which is within the authorized amount allowed under 
the Note Resolution. Bond proceeds will periodically be used to refund a portion
of the notes.
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