Moody’s affirms stable outlook for GRU

Press release from Gainesville Regional Utilities

GAINESVILLE, Fla. – Moody’s Ratings affirmed GRU’s bond rating at Aa3 with a stable outlook on Thursday, July 3. Bond ratings indicate a utility’s ability to repay debt and help determine future borrowing costs. Moody’s is the second rating agency in the past two months to affirm GRU’s solid financial footing.

Click here to read the credit opinion.

In affirming GRU’s stable outlook, Moody’s acknowledged the GRU Authority’s efforts to reduce debt through its 10-year debt-reduction plan and to stabilize rates through reduced payments to the City’s general fund and by cutting operations and maintenance (O&M) and capital expenses.  

The GRU Authority reduced the General Fund Transfer — a percentage of GRU profits paid to the City — from $15.3 million to $8.5 million and applied the savings to paying down debt.

GRU’s debt has dropped from $1.8 billion in fiscal year 2023 to $1.7 billion in fiscal year 2024. The utility has also decreased its debt ratio from 90% in fiscal year 2019 to 85% in fiscal year 2024 and remains on target to reduce about $400 million in debt by 2035.

Overall, Moody’s attributed GRU’s continued stable rating to several factors, including its diverse mix of services, a reliable service territory, “robust” liquidity, and a track record of raising rates, when necessary.

Moody’s also cited “credit challenges,” including high leverage levels, ongoing legal challenges to the GRU Authority and “high electricity rates compared to the state average.”

The report, however, relies on 2023 data for its electric rates. By holding electric base rates steady while other utilities have raised theirs, GRU residential electric rates are now more competitive. Additionally, the reports notes, “GRU’s rate competitiveness is more favorable when looking at the average customer bill for all services including water, wastewater, gas, and telecommunication services.”

“While we still face challenges, Moody’s acknowledges that GRU management and the GRU Authority are working diligently to address and remedy long-standing issues,” says GRU CEO Ed Bielarski. “This report affirms that we are on the right track.”