...Regulatory and Cash Flow Diversity: Southwestern Electric Power Co. (SWEPCO) operates in three utility jurisdictions -- Arkansas, Louisiana and Texas -- providing cash flow diversity. A supportive regulatory environment, which includes fuel cost adjustment clauses and cost riders to mainly recover environmental regulation-related costs, and stability of cash flow from the low-risk regulated businesses are key drivers of SWEPCO's credit profile. General Rate Case Outcome: SWEPCO concluded general rate cases in Louisiana and Texas in 2013. The Louisiana Public Service Commission approved a rate increase of $107 million based on a 10% return on equity (ROE). The Public Utility Commission of Texas approved a $39.4 million increase in rates based on an authorized ROE of 9.65%. Weak Credit Protection Measures: EBITDAR-based leverage (adjusted debt/EBITDAR) and interest coverage ratio (EBITDAR/interest) improved with the implementation of rate increases in Louisiana and Texas. The EBITDAR-based...
