Municipal Electric Authority of Georgia $4.2 billion of bonds upgraded by Fitch

Georgia Power Company

Fitch Ratings upgraded $4.2 billion in Municipal Electric Authority of Georgia bond debt to A-minus from BBB-plus.

The upgrades affect $1.7 billion of Plant Vogtle units 3 and 4 project M bonds and $2.5 billion of Plant Vogtle units 3 and 4 project J bonds. Simultaneously, Fitch affirmed its BBB-plus rating on $1 billion in Plant Vogtle units 3 and 4 project P bonds.

Fitch noted the Vogtle units 3 and 4 recently started commercial operations. "The ratings are no longer constrained by nuclear construction cost uncertainty and start up risk, which allows the focus of our analysis to return to the fundamental credit characteristics of the project," Fitch said.

With construction complete, the credit quality primarily stems from contract payment terms and credit quality of the MEAG Power project participants and two purchase power agreement off-takers, Fitch said.

The purchaser credit quality of the J and M projects is stronger than that of the P project, Fitch said, explaining the higher rating on the former projects' bonds.

Fitch said the J, M, and P bonds have good revenue defensibility as its contracts with customers require they pay for the electricity whether or not they accept it.

On a more cautious note, Fitch said MEAG has high leverage but this was "less of a consideration" in the ratings than the "take-or-pay" nature of its customer contracts.

MEAG Power is a public corporation that provides wholesale electricity to municipally owned electric distribution systems. Load growth has been healthy, with a 6.1% increase in 2021 and 9.2% in 2022, before a 1.3% dip last year. Electric demand stemmed partially from cryptocurrency mining operations. Partly because of additional mining, load growth in 2024 is expected to gain more than 15%, Fitch said.

The project M and J bonds are rated A3 by Moody's Ratings and A by S&P Global Ratings. The P bonds are rated BBB-plus by S&P. Moody's rating of the P bonds could not be immediately ascertained.