Standard & Poor's last week revised the rating outlook for the Southern Minnesota Municipal Power Agency to negative from stable.

The outlook change was triggered by the agency's refunding issue of $256.9 million of power supply system revenue bonds.

Standard & Poor's affirmed an A-plus rating for the refunded debt and for $457 million of the agency's outstanding revenue bonds.

Mary Colby, a research analyst at Standard & Poor's, said the outlook was revised primarily because of possible obstacles to the agency's long-range expansion plans.

She said the rating agency is concerned that only eight of the system's 18 subscribers have renewed their contracts so far. Ms. Colby said the reluctance of many subscribers to sign extensions may indicate concerns about the agency's rates, which are somewhat higher than those of its competitors.

"We see potential problems and we hope they will be resolved in a one- to three-year time frame," she said.

Swift resolutions are essential if the agency is to begin formulating its long-term goals, Ms. Colby said. She added that the agency, which serves southeastern Minnesota, must begin plans for a new facility in the next 18 months if it expects to complete construction in the next five to seven years.

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