Fitch Upgrades Ratings for Keys Energy Services to ‘AA-‘

April 24, 2023

by Paul Ciampoli
APPA News Director
April 24, 2023

Fitch Ratings on April 12 upgraded revenue bonds for Florida public power utility Keys Energy Services to AA-.

Specifically, the rating agency upgraded approximately $76 million in outstanding electric system revenue bonds, series 2019 and series 2014 to ‘AA-‘ from ‘A+’ and the Issuer Default Rating (IDR) to ‘AA-‘ from ‘A+’.

The bonds and IDR have been assigned a Stable Rating Outlook.

Keys Energy Services is the public power utility for the Lower Florida Keys. Headquartered in Key West, Florida, it provides electricity from Key West to the Seven-Mile Bridge and serves more than 30,000 customers.

Keys Energy Services’ rating upgrade to ‘AA-‘ from ‘A+’ “reflects the utility’s very strong and improved financial performance, evidenced by consistently strong operating margins, strong liquidity position, and lower leverage, since 2017,” Fitch said.

Over the past five years, net adjusted debt to adjusted funds available for debt service has declined from approximately 6x to approximately 4.6x, as the utility “has demonstrated significant resilience in demand and financial performance following disruptions from Hurricane Irma in late 2017, impact of the coronavirus pandemic in 2020, and inflationary pressures felt in 2022.”

The rating also considers “the system’s strong revenue defensibility underpinned by the highly monopolistic nature of its revenue source, independent legal ability to raise rates, and favorable demographic trends within its service area,” Fitch said.

The utility’s strong operating risk profile is based on the system’s access to a diverse resource base as an all-requirements member of the Florida Municipal Power Agency and a low operating cost burden, and also factors the system’s isolated geographic location and related risks, Fitch said.