CHICAGO -- Recent safety and personnel problems at a nuclear power plant operated by the Nebraska Public Power District have cast a cloud over the district's finances, according to rating agency officials.

Standard & Poor's Corp. last week revised the outlook to negative from stable on the Nebraska Public Power District's long-term outstanding debt, which is rated A-plus, primarily due to the problems at the Cooper Nuclear Station, located about 65 miles south of Omaha.

Though Moody's Investors Service yesterday affirmed its A-1 rating on the district's debt, the nuclear power plant's safety and management problems "remain a challenge" for the district, the agency said. The district has about $1.5 billion of outstanding long-term debt, district officials said.

Both rating agencies issued their comments in conjunction with the district's authorization to issue $75 million of commercial paper for working capital. Standard & Poor's assigned an A-1 rating to the commercial paper program, while Moody's assigned a P-1 rating. The notes have a revolving line of credit with Morgan Guaranty Trust Co.

In May, the federal Nuclear Regulatory Commission shut down the Coopper Nuclear Station plant citing station lapses in safety and management standards. The power plant is on the commission's declining-performance list.

Bob Gangel, the power district's vice president of finance and administration, said the district is making improvements at the power station and district officials are "positive" that the plant will open in the fall.

So far, the financial impact of the plant's closure has not been significant, said Seth Lehman, an associate director at Standard & Poor's. However, he said, the district's competitive position could weaken depending on when the Cooper plant's problems are resolved. The nuclear plant generates about 20% of the district's annual energy output, district officials said.

In a press release, Standard & Poor's said that "continued operational problems," or placement of the Cooper plant on the Nuclear Regulatory Commission's "watch list" could lead to a downgrade of the district's debt.

Dan Aschenbach, a vice president at Moody's, said that how the Cooper plant fits in the district's generation mix remains uncertain. However, the district has made progress in resolving the commission's safety and personnel concerns, he said. The district has hired new management at the nuclear power plant and has implemented rigorous assessment programs, he said.

Despite problems at the plant, Moody's said the district's strong management has enabled the district to meet its major operational and financial commitments, "including maintenance of a sound financial position," customer contract renewals, and compliance with federal clean air laws.

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