CHICAGO--(Business Wire)--
Fitch Ratings has assigned a rating of 'A+' to Northern States Power
Co.-Minnesota's (NSPM) $300 million 5.35% first mortgage bonds due Nov. 1, 2039.
Proceeds from the sale will be used to repay short-term and maturing debt, as
well as for general corporate purposes. The Rating Outlook for NSPM is Stable.
The ratings for NSPM take into consideration the company's historically strong
and consistent cash flows, constructive regulatory environments, and projected
growth resulting from investments in rate base. Fitch projects NSPM's credit
metrics will remain strong relative to both peers and its rating category over
the next several years, with FFO interest coverage of approximately 5.2 times
(x) to 5.6x, and FFO leverage of approximately 25%-28%. Of some concern is the
company's large capital spending program, approximately $4.1 billion through
2012; however, this is somewhat mitigated by supportive rider mechanisms that
will help maintain NSPM's credit profile during this period of growth. This
strategy should limit the risk or rate shock by causing only incremental
increases in customers' rates, thereby increasing the probability of Commission
support. Fitch estimates NSPM to fund 50%-60% of its capital needs after
dividends to Xcel Energy Inc. (XEL, Issuer Default Rating 'BBB+' with a Stable
Outlook), with internally generated cash; the remaining cash needs will be
satisfied by a combination of first mortgage bond offerings at NSPM and equity
infusions from XEL.
NSPM's capital spending program consists primarily of Minnesota Public Utilities
Commission (MPUC)-approved investments in generation, transmission, and
renewable wind projects as well as significant spending to extend the lives of
and expand capacity at NSPM's Monticello and Prairie Island nuclear plants. As
part of the company's recent rate order, the MPUC approved a 10-year life
extension of the Prairie Island nuclear plant for purposes of determining
depreciation and decommissioning expenses, effective Jan. 1, 2009.
In September 2009, NSPM received approval for an electric rate increase of
approximately $91.4 million, and a 10.88% return on equity (ROE). This concludes
the company's initial rate request of $156 million, later modified to $136
million in November 2008. In June 2009, NSPM filed for a $18.6 million rate
increase request in South Dakota electric, premised on a requested ROE of 11.25
percent, and an electric rate base of $282 million. Rates are expected to be
effective in January 2010, based on statutory requirements in South Dakota.
NSPM, a wholly-owned subsidiary of Xcel, is a regulated integrated utility
serving approximately 1.4 million electric customers in Minnesota, North Dakota
and South Dakota, and 500,000 natural gas customers in Minnesota and North
Dakota.
Additional information is available at 'www.fitchratings.com'.
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PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
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DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
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Fitch Ratings
Cindy Stoller, +1-212-908-0526 (New York)
cindy.stoller@fitchratings.com
Karen Anderson, +1-312-368-3165 (Chicago)
Sharon Bonelli, +1-212-908-0581 (New York)
Copyright Business Wire 2009
