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EBCE Earns an ‘A’ Grade from Standard & Poor

Apr 12, 2022

EBCE earned a top credit rating from Standard & Poor, reflecting our solid and stable financial outlook.

A Boy Showing His Grade From The Test

EBCE’s financial report card is back, and we got an ‘A.’

S&P Global Ratings gave EBCE an issuer credit rating (ICR) of ‘A,’ indicating a solid and stable financial outlook.

In their analysis, S&P said EBCE “has quickly gained more than half a million customer accounts and, we believe, has achieved credit supportive financial results while offering competitive rates.”

Credit ratings are forward looking opinions about a business or government’s relative creditworthiness. According to S&P, the ratings “provide a common and transparent global language” for investors to judge the likelihood of whether an entity will repay its debts on time and in full.

“The credit rating is important for two reasons,” says EBCE CEO Nick Chaset. “For EBCE’s counterparties, such as renewable energy project developers, it shows that we’re on solid financial footing and are low risk, which can help us secure the best terms in our contracts. This in turn translates to better access and service of low-cost, long-term renewable energy for EBCE customers in the decades to come.”

To date, EBCE is the largest community choice aggregator (CCA) in California to earn an ‘A’ credit rating, with its acquisition of 640,000 customer accounts in just three years.

The S&P report cites a number of financial strengths:

  • EBCE carries no debt (as of FY 2021) and has more than 180 days of liquidity.

  • EBCE has put together a diverse portfolio of energy and storage suppliers, varying by contract type, geographic location, and technology.

  • Because EBCE does not own transmission lines and other physical assets, it has limited exposure to wildfire liability and risk.

It also acknowledges some areas of risk:

  • The power charge indifference adjustment (PCIA), or “exit fee” paid to PG&E varies annually, and can be raised with regulator approval. Though “in the longer term, the PCIA will become less meaningful as power supply contracts that PG&E signed for its former customers expire.”

  • Customers are free to opt-out of EBCE service and return to PG&E, though opt-out rates have been less than 5%, “which we view as low and demonstrating EBCE’s value proposition.”

  • As EBCE continues expanding procurement of new clean resources it will need to maintain a diverse mix and hedge against price fluctuations.

S&P sees EBCE’s governance as “credit-supportive, as they include robust joint powers agreements with members, full rate-setting autonomy, comprehensive policies and planning (including a risk management program with detailed hedging targets), and a sophisticated management team.”

On balance, S&P says “The stable outlook reflects our expectation that EBCE’s rates will maintain competitiveness with PG&E, enabling the CCA to sustain its large customer base. We also believe that EBCE’s significant unrestricted reserves will continue growing, providing flexibility to meet financial obligations.”

The full credit rating report can be found here.