Mergers & Acquisitions
CP&L + Florida Progress. Carolina Power & Light announced Aug. 23 that it would purchase Florida Progress Corp. for $5.3 billion in a combination that...
Tennessee Valley Authority (TVA) chairman Craven Crowell says he will resist General Accounting Office (GAO) pressure to raise TVA rates. According to Crowell, a forthcoming GAO report criticizes TVA for not raising rates to reduce debt, and suggests privatization. "Everyone recognizes that TVA's debt is large, but the size of the debt is not as important as our ability to manage it," Crowell maintains, noting that a recent study by utility consulting firm Palmer Bellevue concludes that TVA can remain competitive by effectively managing the debt. Actions cited by Palmer Bellevue include maintaining stable power rates, setting a debt ceiling, suspending construction of three nuclear units, reducing the workforce, increasing customer flexibility, and using TVA's first integrated resource plan to acquire power-supply options from outside sources.
Meanwhile, Moody's Investors Service has assigned an "Aaa" rating to the first Global Power Bond issue to be sold by TVA. Moody's says the rating is highly dependent on TVA's status as an agency of the federal government. Although TVA's debt is not a government obligation, TVA's status as an agency, with the government as sole shareholder, indicates strong implied support in times of difficulty. Moody's also says any move toward privatization would threaten the rating, but notes that the current risk that TVA will be privatized remains relatively low.
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