...Stable Outlook on Sound Fundamentals: The essential services provided by the sector, monopolistic business nature and local rate-setting are key factors in the sector's performance stability. These fundamentals insulate the sector to some extent from changing operating and economic cycles. Strong Operating Results Tightening: Based on Fitch Ratings' latest medians, cash flows from operations continue to cover debt service by a wide margin. However, headwinds from stagnant sales and rising costs are evident, eroding overall cost recovery. Operating pressures will continue in 2016, but ongoing rate adjustments should preserve very good debt service coverage for the year. Substantial Reserves: Capital debt financings coupled with lower capital spending overall in recent years largely has pushed surplus cash flows to the bottom line, fueling steady increases to utilities' already sizable cash balances. These strong reserve levels provide a good deal of flexibility in meeting operating and capital...
