OREANDA-NEWS. Fitch Ratings affirms the 'A+' rating on the following Greer, SC Commission of Public Works (CPW) bonds:

--\$51.4 million combined utility system revenue bonds, series 2002 and 2007.

The Rating Outlook is revised to Positive from Stable.

SECURITY

The bonds are secured by net revenues of the combined system consisting of gas, electric, water, and wastewater systems.

KEY RATING DRIVERS

COMBINED REVENUE PLEDGE: Greer Commission of Public Works' (CPW) rating is supported by the diverse revenue pledge of its combined four utility systems, solid financial profile, stable liquidity, and low transfers to the City of Greer.

OUTLOOK REVISION TO POSITIVE: The Positive Outlook for CPW reflects the vibrant local economy and improvement in key credit metrics to levels which are strong relative to Fitch 'A+' medians for retail systems. Based on preliminary fiscal 2014 results, CPW's debt service coverage and liquidity, as measured by days cash on hand, approximated 2.6x and 116 days, respectively.

STABLE POWER SUPPLY: The vast majority of CPW's power is supplied by Piedmont Municipal Power Agency (PMPA, 'A-'/Outlook Stable). PMPA's primary power source is the Catawba No. 2 Nuclear Plant, a stable and non-carbon emitting resource. Fitch notes that CPW's recent adoption of a purchased power adjustment mechanism should improve the timeliness of recovering future changes in PMPA's wholesale rate.

LOW COST PROVIDER: CPW's electric rates are competitive relative to other retail systems (both municipal and investor owned) in its region.

ROBUST SERVICE AREA ECONOMICS: Although CPW's regional economy is concentrated in manufacturing, the local unemployment rate at 5% is below the state average and wealth indicators are also strong. There is some amount of customer concentration, with CPW's two largest customers, Mitsubishi Polyester Film, Inc. and BMW North America, representing 12.2% of combined system revenue. The stable historical performance of these customers and continued investment in their respective Greer SC based operations are mitigating factors.

RATING SENSITIVITIES

ABILITY TO SUSTAIN FINANCIAL METRICS: CPW's ability to recover higher wholesale rates levied by PMPA, fund ongoing capital expenditures, maintain low transfers to the city of Greer, and continue to meet its targeted 2.25x debt service coverage will be important considerations in future rating actions by Fitch.

CREDIT SUMMARY

Service Territory
CPW is located in the Spartanburg and Greenville counties in northwestern South Carolina along Interstate 85 between Charlotte and Atlanta. CPW is a combined utility system that serves about 26,000 customers in the city of Greer, SC and neighboring areas. Each of the systems has experienced strong customer growth since 2000. Total operating revenues in 2014 equaled \$83.8 million, consisting of 46% electric, 37% gas, 8% water, 6% sewer and 3% other system revenues.

Resource Mix
Greer purchases about 96% of its energy from PMPA. The remaining 4% is purchased from a share of hydro resources owned by the Southeastern Power Administration (SEPA) - a federal government entity. Natural gas supplies are purchased from a variety of sources, including TexLa Energy Management Corporation, BP Energy, Atmos Energy and EDF Trading North America. CPW's supply portfolio has enabled it to maintain electric and gas rates that are competitive relative to neighboring systems.

Financial Position
Preliminary fiscal 2014 results were favorably impacted by prior rate increases and continued growth in customers and retail sales volumes. In addition, colder than normal weather conditions positively affected throughput volumes, particularly on the gas system. As a result, debt service coverage improved to 2.56x as of Dec. 31, 2014 versus 2.21x in 2013. While CPW's rate covenant requires coverage of at least 1.20x, the commission maintains an internal target of 2.25x.

Liquidity remains solid following a period of moderate strain brought on by CPW's strategy to delay the recovery of natural gas costs during 2008 to minimize rate shock. CPWs liquidity, as measured by days cash on hand, was in line with 'A+' medians at 133 days as of Dec. 31, 2013. This represents a marked improvement from the 56 days cash in 2010. Going forward, CPW expects to maintain liquidity at approximately 130 days of operating expenses even as the utility plans to fund a majority of future capex with cash on hand.