The rating on Tacoma, Wash.'s (Tacoma Power) bonds reflects ongoing stress on the utility's cash position due to low hydro conditions at Tacoma's hydroelectric facilities and unprecedented wholesale market prices in western power markets, which the utility is exposed to because of a need to augment its diminished hydroelectric resources. The financial stress is evidenced by the $35 million short-term borrowing needed to cover a deficit and provide operating liquidity. Also, because of weakened cash flow, the utility has made accounting adjustments to defer approximately $45 million in purchased-power costs into fiscals 2002 and 2003. The negative outlook reflects the possibility that continued volatility in wholesale power markets could necessitate additional short-term borrowing for cash flow or delay Tacoma's recovery
