Mary Hansen Staff Writer @maryfhansen
In 2015, City Water, Light and Power came to the Springfield City Council with a problem. The public utility was at risk of a technical default on its bonds and needed a quick infusion of cash.
The council eventually approved what amounted to a $4.4 million bailout for CWLP. City officials then went to work on refinancing the electric funds debt, renegotiating its coal contract and restructuring electric rates, which they see as largely successful efforts to turn around CWLPs finances.
With the city facing dropping revenues and a tough budget year, some aldermen say now its time for the utility to pay back at least some of that $4.4 million.
But utility and city officials warn that a transfer could set back the progress theyve made. City lawyers are looking intoif its legally possible.
The situation is in fact the reverse of what it was two years ago, said Ward 7 Ald. Joe McMenamin, who is pushing for the transfer of $1.3 million from CWLP to the citys main account, which is called the corporate fund and pays for most non-utility city services.
The electric division was suffering financially and the corporate fund was growing, he said. Now the electric division is very healthy and corporate fund is suffering because of a downturn in the local economy.
Worries about rating agencies
Mayor Jim Langfelder has often touted CWLPs turnaround, including its stable bond rating, as a key accomplishment for his administration and the council that took office in 2015. He has said a payback could send the wrong message to credit rating agencies.
Chief engineer Doug Brown echoed these concerns, saying the agencies would have a negative outlook on the transfer and it could lead to a credit downgrade. Credit ratings determine how much interest the utility pays on its bonds.
It will take a very long time to recover from this action and counter another negative outlook, Brown wrote in an emailed statement. Any ratings downgrade is an increase in costs to our customers, the citizens of Springfield.
CWLPs contracted financial analyst told the utility any transfer would trigger a credit review by an agency, according to spokeswoman Amber Sabin.
A spokesman for Moodys Investors Service declined to comment so early in the discussion on the proposal but said Moody's would be monitoring the situation.
In the fall of 2015, Moodys improved its outlook on the CWLP electric funds finances, changing it from negative to stable, just after the council voted change the way the utility charged customers.
In its report, the agency said that if officials stopped supporting improvements to CWLPs financial position, it could lead to a downgrade of the utilitys credit rating.
The $1.3 million transfer could be seen as weakening support, Sabin said.
But McMenamin argued that the transfer amount is relatively small compared to the utilitys more than $300 million budget.
I think the bond rating agencies are looking at broader trends than a $1.3 million transfer, he said. Theyll be looking at continued strength of the debt coverage ratio and continuing reserves of electric division, which is whats happening.
He pointed to a recent quarterly update from the utility that put its monthly reserves at $18 million in November.
Still, according to the utility, the standards set by rating agencies for utilities CWLPs size is having $33.9 million cash on hand.
Legal issues
McMenamin has introduced two measures to repeal the 2015-bailout ordinances, which the council could discuss Tuesday at its committee meeting.
At the time, the ordinances waived the utilitys payment in lieu of taxes, which is money CWLP pays into the corporate fund, and instituted a refund of previous payments if necessary to ensure that CWLP had enough money to meet its debt coverage ratio for the fiscal year.
Payments were waived or refunded enough for the utility to meet their obligations that year. But, Sabin warns, if the money was paid back, auditors could revise that fiscal years books, triggering a review and potential downgrade from rating agencies.
Plus, the first ordinance stated that the amount would not have to be repaid, Brown pointed out.
But the council has the power to change what the previous council passed and should do so because the financial situation has changed, McMenamin countered.
That should be an option on the table for the mayor, McMenamin said. There should be a full repayment if the electric division continues to grow more financially healthy and if there is a need.
-- Contact Mary Hansen: 788-1528, mary.hansen@sj-r.com, twitter.com/maryfhansen.
Read this article:
CWLP officials: Bailout repayment would set back progress - The State Journal-Register
- The Daily Progress: The Daily Progress, Charlottesville News [Last Updated On: March 25th, 2016] [Originally Added On: March 25th, 2016]
- Progress Lighting - Home [Last Updated On: March 25th, 2016] [Originally Added On: March 25th, 2016]
- WTC PROGRESS - One World Trade Center [Last Updated On: July 10th, 2016] [Originally Added On: July 10th, 2016]
- Postpartum Progress - postpartum depression and postpartum ... [Last Updated On: July 10th, 2016] [Originally Added On: July 10th, 2016]
- Center for American Progress [Last Updated On: July 18th, 2016] [Originally Added On: July 18th, 2016]
- Contact Us - Progress Energy [Last Updated On: July 27th, 2016] [Originally Added On: July 27th, 2016]
- National Assessment of Educational Progress (NAEP) [Last Updated On: October 11th, 2016] [Originally Added On: October 11th, 2016]
- Progress Announces ProgressNEXT 2017 Partner Conference - Business Wire (press release) [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Think Progress Editor Mocks Audi for Equal Pay Super Bowl Ad - Breitbart News [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Penguins injuries: Hagelin has concussion; Malkin still out, but making progress - NBCSports.com [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Patel: Syria progress at risk without new push in 2017 - ReliefWeb [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Market Recon: There's Progress on the Deregulation Front - TheStreet.com [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Assignment Helps Students Assess Their Progress - Faculty Focus (blog) [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Kiener Plaza reopening in May; Gateway Arch renovations continue progress - STLtoday.com [Last Updated On: February 6th, 2017] [Originally Added On: February 6th, 2017]
- Progress being made on possible grocery store co-op in Winston-Salem - myfox8.com [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Nioh Review-in-Progress: FromSoftware's Formula Evolved - Shacknews [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Deutsche Bundesbank Cites Progress With Blockchain-Based Settlement - CryptoCoinsNews [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Progress apparent on defense - Pittsburgh Steelers - Steelers.com [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- IMF: Greece's Debts are Still Unsustainable, Despite Progress - Voice of America [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Haupt's Take: It took eight years to destroy 50 years of progress - Watchdog.org [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Cavaliers' pitching rotation a work in progress - The Daily Progress [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- Can US disrupter-in-chief trigger some progress? - Jerusalem Post Israel News [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- The Cost of Progress - Slate Magazine [Last Updated On: February 7th, 2017] [Originally Added On: February 7th, 2017]
- DACC women making progress - Danville Commercial News [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- City police cite progress vs. drugs - Rutland Herald [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Women's Progress in the Boardroom Took a Hit in 2016 | Inc.com - Inc.com [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Britney Spears Says Niece Maddie Is 'Making Progress' After ATV Accident: 'Let's All Keep Praying' - PEOPLE.com [Last Updated On: February 9th, 2017] [Originally Added On: February 9th, 2017]
- Progress on vet's Mustang to be unveiled - Indianapolis Star [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Through the looking glass: Tower view showcases progress on Amazon's unique biospheres - GeekWire [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Blight Elimination Progress, Uplifting - MyWabashValley [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Forecasters See Slow Progress in Labor-Market Measures Favored by Trump Administration - Wall Street Journal [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- United coach Adrian Heath looks at steady progress after third straight draw - TwinCities.com-Pioneer Press [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Evgeni Malkin making 'progress,' could return Saturday in Arizona ... - Pittsburgh Post-Gazette [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Franks recognized as 2016 Partner in Progress - Chanute Tribune [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- 49ers players optimistic about progress under Shanahan, Lynch - The Mercury News [Last Updated On: February 10th, 2017] [Originally Added On: February 10th, 2017]
- Colts position review: OL showed legit progress, but work remains - Indianapolis Star [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Jimmy Cheek: UT chancellor appreciative of hard work, progress on journey - Knoxville News Sentinel [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Egyptian Economy Making Slow, Tentative Progress - VOA News - Voice of America [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Marginal progress for Turkish-backed forces in north Syria - PBS NewsHour [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Syria Regional Crisis 2016 Emergency Appeal - Progress Report - Reliefweb [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Clairton works: Real progress is coming to the former steel town - Pittsburgh Post-Gazette [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Pistons' Johnson making halting but definite progress - The Detroit News [Last Updated On: February 12th, 2017] [Originally Added On: February 12th, 2017]
- Bluefield officials urge those that want to see city progress to take online survey - Bluefield Daily Telegraph [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- Virginia lawmakers making big progress despite shorter session - The Charlottesville Newsplex [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- Tech industry shows little progress on racial diversity - VentureBeat [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- North Korea Claims Progress on Long-Range Goal With Missile Test - New York Times [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- How Travel Bans Can Impede America's Progress - Forbes [Last Updated On: February 13th, 2017] [Originally Added On: February 13th, 2017]
- Adele, Beyonc, and the Grammys' Fear of Progress - The Atlantic [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- Ionis Earns $75M Milestone from Bayer for Progress of Antisense Drug Program - Genetic Engineering & Biotechnology News (press release) [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- Guilford Schools annual report shows mixed results on progress - Greensboro News & Record (blog) [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- Sniper Elite 4 review in progress - PC Gamer [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- At California's Oroville Dam, Progress Made, but Threat Lingers - Wall Street Journal [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- For Honor Review In Progress - GameSpot [Last Updated On: February 14th, 2017] [Originally Added On: February 14th, 2017]
- Downtown Seattle's 'incredible year of progress' - The Seattle Times [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- CDC reports more progress against HIV, but gay Latinos contracted more infections - Washington Post [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- China's military progress challenges Western dominance, says IISS - Deutsche Welle [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- PFW in Progress Recap 2/14: Patriots Offseason Outlook - Patriots.com [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Huntsville-based Progress Bank to acquire Birmingham's First Partners Bank - Birmingham Business Journal [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- California officials lift evacuation order for 200000 threatened by damaged dam - CBS News [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Indiana Regional Cities Initiative Gets Progress Report - Tristatehomepage.com [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Clean Samish Initiative partners discuss progress - goskagit.com [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Man United's Jose Mourinho: Progress in cups will create 'many problems' - ESPN FC [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Google Touts Progress in Android Security in 2016 - Threatpost [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- UW coach Lorenzo Romar: Markelle Fultz making progress but still not cleared to play - The Seattle Times [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Some Progress On Occupational Licensing But Much More Needed - Forbes [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Officials making 'great progress' on California dam repairs, remind residents to stay vigilant - Fox News [Last Updated On: February 15th, 2017] [Originally Added On: February 15th, 2017]
- Republicans' health care overhaul still a work in progress - Press Herald [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Why Do We Pay So Much More for No Progress? - Cato Institute (blog) [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Halo Wars 2 Review in Progress - IGN [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Lenovo's data center ambitions remain work in progress following Q3 results - ZDNet [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- S&P 500: 'Blow-off' Phase in Progress - DailyFX - DailyFX [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- F-35 Program Makes Significant, Solid Progress, Official Says - Department of Defense [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- PFW in Progress Recap 2/16: Free Agency and Potential Patriots - Patriots.com [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Combine invites are another sign of progress at Michigan - Big Ten ... - ESPN (blog) [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Donald Trump touts promise progress at press conference - PolitiFact [Last Updated On: February 17th, 2017] [Originally Added On: February 17th, 2017]
- Mild winter helping crews make significant progress on East End Connector - WRAL.com [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Latest edition of Pig Progress goes to Asia - Pig Progress (registration) (blog) [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Committee updates Legislature on precinct consolidation progress - Chicago Tribune [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- SEC basketball shows progress but has room for growth - STLtoday.com [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]
- Willoughby-Eastlake libraries make progress on renovations - News-Herald.com [Last Updated On: February 18th, 2017] [Originally Added On: February 18th, 2017]