Ratings agencies affirm and strengthen Basin Electric’s rating

Tough decisions of the past two years played a part in the move to a stable outlook.

The ratings agencies Fitch Ratings and S&P have changed their outlook on Basin Electric’s rating to stable.

Steve Johnson, Basin Electric chief financial officer and senior vice president, said Basin Electric's tough decisions of the past two years played a part in the move to a stable outlook.

“As they went through their analysis, they looked at the items we said we were going to do over the last two years, and how our financial forecast looked going forward,” Johnson said. “As you take the additional revenue with the intra-year rate increase in 2016, decreased expenses including the reduction in force last year, and you pull everything together with what they’ve seen historically, it’s very gratifying that the ratings agencies recognize that we took drastic steps and we are stronger for it.”

In 2016, S&P placed Basin Electric on negative outlook and Fitch changed its rating from A+ to A as well as changed its outlook to negative.

“That negative outlook would indicate that there’s a greater chance than not that when the agencies review your ratings again, you could be downgraded. That outlook reflects their vision of us for the future,” Johnson said. “So bringing us back to stable is very important because it’s saying in their view, they don’t anticipate a change in the rating. We are ‘A’ rated with a  stable outlook."

Additionally, Fitch Ratings recently announced new long-term ratings criteria. “What’s become extremely important to them is leverage. To what degree are you using debt financing versus what you have available from an equity position. They note that we have stabilized and increased our margins while at the same time decreasing our leverage. We have continued to repay principal over the last couple of years and have added relatively little debt.  We are also expecting to add very little debt over the next 10 years,” he said. “Those factors mean our leverage will continue to go down, and they see that as a strength and change from previous Basin Electric presentations.”

Moody’s Ratings affirmed Basin Electric’s rating with a stable outlook this year.

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