The rating on Austin, Texas' bonds reflects the city's combined utility's historically strong financial performance, diverse service area economy, and strong legal provisions. The outlook revision reflects Standard&Poor's belief that the city will implement its strategy for becoming more competitive over the next 10 years. The change in outlook also reflects management's recent success in signing contracts with three of the electric utility's largest customers. Furthermore, as the Texas legislature did not pass legislation related to retail wheeling in the recent session, the next opportunity will not be until the next legislative session in 1999, providing the utility with additional flexibility. The system has made significant progress, recently identifying areas where costs will be reduced, including elimination of
