As big projects come down pipe, water utility gets top bond rating

The Plum Island Wastewater Treatment Plant is getting new equipment as part of Charleston Water System’s $147.66 million capital improvement plan.

Charleston Water System is earning high marks from Wall Street credit-rating firms, which is expected to translate into lower interest payments as it prepares to borrow nearly $150 million for improvement projects.

Moody’s upgraded the utility’s bond rating to Aaa from Aa1 earlier this month. The company cited the local water provider’s diverse and growing service area and a “healthy financial position with very high levels of liquidity” and a debt-service coverage ratio “that has consistently exceeded projections.

Moody’s added that its stable outlook for the system “incorporates the expansion and further growth potential of the service area and the strong asset management plan.”

Meanwhile, Standard & Poor’s and Fitch reaffirmed their previous ratings of AAA and AA+, respectively.

The announcements coincide with Charleston Water System’s plan to issue $147.66 million in bonds this month to pay for 18 projects, including:

Extension of the 16-inch water transmission main serving Hollywood and Ravenel;

New equipment at the Plum Island Wastewater Treatment Plant near James Island;

Rehabilitation of the gravity sewer trunk mains that serve the S.C. Highway 61 corridor and Johns Island; and;

Replacement of a 110-year-old settling basin at the Hanahan Water Treatment Plant.

“Water and sewer are must-have services, and we have a lot of aging infrastructure that needs to be replaced, not to mention new infrastructure that’s needed to serve our growing population,” Charleston Water System CEO Kin Hill said in a written statement. “Our capital program is costly, but having triple-A bond ratings will allow us to borrow the needed funds at the lowest possible cost to our rate-paying customers.”

The system provides water service to more than 400,000 residents in the region and sewer service to about 180,000 people, mostly in the city of Charleston. Its revenue comes from rates and fees from customers, impact fees from developers, and interest income.

The bond sale is scheduled for July 26.