OREANDA-NEWS. S&P Global Ratings has assigned its 'A' rating to Clark County Public Utility District (PUD) No. 1, Wash.'s electric system revenue and refunding bonds series 2016, and the PUD's generating system revenue and refunding bonds series 2016. At the same time, S&P Global Ratings affirmed its 'A' rating on all district bonds outstanding for the electric and generating systems. The outlook is stable.

"The ratings reflect our view of solid liquidity, a robust local economy, a largely residential customer base, which contributes to revenue stability, a low-cost power supply portfolio, and sufficient resources to comply with the state's renewable-portfolio standards initiative," said S&P Global Ratings credit analyst Doug Snider.

The district will use bond proceeds to fund capital improvements to the electric distribution and generating systems, prepay draws outstanding on a line of credit, and refund portions of series 2007, 2009, 2010, and 2011 bonds.

The district is coterminous with Clark County and is located in southwestern Washington near the Oregon border, nine miles north of Portland, Ore. The electric system served approximately 194,000 customers at fiscal year-end 2015. Service area demographics are mixed, with income levels about 8% above the state average, but unemployment trending around 1% above the U. S. average. The overall customer base has grown an average of 1.2% per year since 2011. Although annual customer growth is projected at 1.7% through 2020, we expect conservation to keep retail sales flat. The customer base is predominately residential and what we view as diverse, with the top 10 accounting for less than 12% of revenue, which we believe contributes to revenue stability.

The stable outlook reflects our expectation that the PUD will maintain coverage and cash reserves at or near current levels, consistent with the rating. The outlook also reflects our view of the continued strength and diversity of the district's economy and customer base. We believe rating stability will rely on the extent to which the PUD is able to manage its power costs and fulfill increasing renewable-energy requirements, which are generally more costly, while consistently meeting or exceeding projections of debt service coverage and liquidity.

We could raise the rating in the next two years if liquidity and coverage levels remain consistently strong in the face of potentially volatile hydrological conditions and natural gas prices.

Should the PUD fail to make timely rate adjustments in the face of rising power cost requirements, or should financial performance weaken materially because of poor hydrological conditions or fluctuating natural gas prices, we could lower the rating.