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Citizens Energy Group

Issuer Type: Combined Utility

Bond Ratings

1 of 6

CWA Revenue Bonds

Moody's
Aa3
S&P
AA
Fitch
A+

Water Revenue Bonds

Moody's
Aa3
S&P
AA
Fitch
A+

GUDS Revenue Bonds

Moody's
Aa3
S&P
AA
Fitch
A+

Thermal Energy System Revenue Bonds

S&P
A
Fitch
A

Citizens Wastewater of Westfield, Series 2019A

S&P
AA-

Citizens Water of Westfield, Series 2019A

S&P
AA-
John Brehm

On behalf of Citizens Energy Group, I would like to welcome you to our new investor relations website. We appreciate your interest and investment in bonds issued by the Company, as it allows us to make critical investments in public infrastructure throughout the region. We are committed to maintaining our strong bond ratings, and we are also committed to being as transparent as possible with the investor community and public at large.

I hope you find this website useful as you seek to better understand the credit fundamentals of Citizens Energy Group. Please do not hesitate to contact our office with suggestions for how we can be doing better. Thanks again for your interest in our bond program.

John Brehm, Senior Vice President & Chief Financial Officer

News & Highlights

September 6, 2019

Press Release
Fitch Upgrades Indiana Finance Auth CWA Project First Lien Wastewater Revs to 'A+'; Outlook Stable

Fitch Ratings assigns an 'A+' rating to the following Indiana Finance Authority (IFA) bonds issued on behalf of CWA Authority, IN (CWA):

--Approximately $40.5 million first lien wastewater utility revenue bonds, series 2019A (CWA Authority Project) (Green Bonds).

The 2019A bonds are being sold to fund various CWA wastewater system (the system) capital improvements, repay draws under a line of credit, fund a debt service reserve surety policy and pay costs of issuance. The bonds are expected to sell via negotiation the week of Sept. 23, 2019.

Fitch also upgrades to 'A+' from 'A' the rating on the following outstanding IFA bonds issued on behalf of CWA:

--$559.8 million in outstanding first lien wastewater utility revenue bonds, series 2014A 2015A and 2016A (CWA Authority Project);
--$41.9 million in outstanding second lien wastewater utility refunding revenue bonds, series 2016B (CWA Authority Project).

The Rating Outlook is Stable.

Read Press Release

September 4, 2019

Press Release
Moody's upgrades CWA Authority, Inc. (IN) to Aa3 from A1; outlook stable

Moody's Investors Service ("Moody's") has assigned a Aa3 rating to the
CWA Authority, Inc.'s $40.5 million First Lien Wastewater Utility Revenue Bonds, Series 2019A (CWA Authority
Project) (Green Bonds). Concurrently, Moody's upgraded CWA's outstanding senior lien and subordinate lien
revenue bond ratings to Aa3 and A1, from A1 and A2, respectively. After the 2019A issuance, CWA Authority,
Inc. will have approximately $1.8 billion of debt outstanding. The outlook is stable.

RATINGS RATIONALE
CWA Authority, Inc.'s (CWA) senior lien upgrade to Aa3 from A1 reflects the utility's successful implementation
of rate increases to recover costs, pay debt service, and maintain a sound financial position until the federally
mandated consent decree is substantially completed in 2025. The Aa3 rating also contemplates the consent
decree capital plan, which is several months ahead of schedule and roughly $400 million under budget. CWA
is managed by Citizens Energy Group (Citizens) through a charitable trust structure, and serves Indianapolis -
Marion County, IN (Aaa stable). Rates are regulated by the Indiana Utility Regulatory Commission (IURC),
which is unusual for municipal utilities. Despite CWA's rate regulated status, the utility has been able to secure
approval for rate increases cumulatively amounting to just shy of 75% since 2014, demonstrating the IURC's
credit supportive actions concerning CWA's rate increase requests. The wastewater bond indenture is closed
loop, is isolated from any of Citizens' non-core business operations, and the bonds are secured by a fully
funded debt service reserve.

CWA's subordinate lien upgrade to A1 from A2 reflects the same dynamics that led to the senior lien upgrade,
however subordinate lien debt service payments are made after senior lien payments in the flow of funds and
the subordinate lien has a lower rate covenant.

RATING OUTLOOK
The outlook is stable given our expectation for steady debt service coverage levels around 1.5x, no need for
significant rate increase requests to complete the consent decree capital plan and for the consent decree
capital plan to remain ahead of schedule and below budget.

FACTORS THAT COULD LEAD TO AN UPGRADE
- Once the consent decree capital plan is completed
- Debt service coverage ratio consistently above 1.75x

FACTORS THAT COULD LEAD TO A DOWNGRADE
- Debt service coverage ratio consistently below 1.25x
- Major construction delays associated with the consent decree capital plan

LEGAL SECURITY
The wastewater bonds are secured by the net revenues of the wastewater system. The indenture provides for
a 1.20x on all First Lien Debt Service Requirement (with adjustments for rate stabilization transfers) or 1.0x on
all required First Lien deposits. The indenture provides for a 1.10x on Second Lien Debt Service Requirements
(with adjustments for rate stabilization) or 1.0x on all required Second Lien deposits. The debt service reserve
consists of the lesser of 10% of par amount of bonds, maximum annual debt service, or 125% of average
annual debt service.

USE OF PROCEEDS
Finance the costs of improvements and additions to the wastewater system and fund a debt service reserve
for the CWA Authority, Inc. 2019A bonds.

PROFILE
Citizens Energy Group (Citizens) is the trade name of the Department of Public Utilities of the City of
Indianapolis, Indiana (Department). The Department was formed in 1929 to provide the governance structure
for the City of Indianapolis to act as a successor trustee of a public charitable trust (Energy Trust) providing
natural gas utility services in the City of Indianapolis and to own and operate other utility systems serving areas
within and outside the City of Indianapolis.

Citizens operates: the Gas Utility & Distribution System, the Thermal Energy System, the Water System and
CWA. Each system has issued debt independently secured by pledged revenues of each system to a separate
dedicated trust. These separate trusts are designed to insulate one trust from liability for obligations for
another trust, so they do not become jointly liable solely because the same entity is the trust of both. Each
indenture permits Citizens or CWA, as applicable, authority to use residual revenues for other purposes
permitted by the language of the respective indenture. Citizens' water indenture and CWA's wastewater
indentures, however, permit only the use of the excess revenues for the water and wastewater systems,
respectively.

The wastewater system is owned by CWA, a separate nonprofit corporation, which, through an inter-local
agreement entered into between Citizens and the City of Indianapolis, has the power to exercise all rights and
powers of the City, except the City's taxing power, and Citizens in connection with the provision of wastewater
utility services. The Wastewater System is managed by employees of Citizens under an operating agreement
between Citizens and CWA.

METHODOLOGY
The principal methodology used in these ratings was US Municipal Utility Revenue Debt published in October
2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of debt or security this announcement provides certain
regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series,
category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from
existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this
announcement provides certain regulatory disclosures in relation to the credit rating action on the support
provider and in relation to each particular credit rating action for securities that derive their credit ratings from
the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be
assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms
have not changed prior to the assignment of the definitive rating in a manner that would have affected the
rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on
www.moodys.com.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related
rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal
entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures
for each credit rating.

Thomas Brigandi
Lead Analyst
Project Finance
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376

Client Service: 1 212 553 1653
Kurt Krummenacker
Additional Contact
Project Finance
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

Read Press Release

February 1, 2019

News
Citizens Meets Record Demand for Natural Gas

Citizens Energy Group delivered a record amount of natural gas to its customers during the extraordinarily cold weather from Tuesday through Thursday this week. On Thursday, the utility established a new one-day record for gas deliveries, eclipsing the previous single-day record set on January 1, 2018.

“Citizens met the needs of its customers during this record cold snap thanks to careful supply planning and the daily dedication of our employees,” said Jeffrey Harrison, Citizens Energy Group President & CEO.

Multiple suppliers and Citizens’ extensive natural gas storage capacity help ensure the utility has the natural gas its customers need during periods of peak demand. In addition, more than $650 million of system investments made over the past 30 years have made Citizens’ natural gas system one of the safest and most reliable urban gas utilities in the nation. The safety and integrity of the Citizens natural gas system is confirmed by an ongoing study by the Environmental Defense Fund and Google Maps, which found minimal leaks on the Indianapolis system compared to other cities across the U.S. The study can be found here.

Although the increased consumption from the cold snap may impact customers’ bill, the average annual residential gas bill in Indianapolis has declined more than 40 percent since 2009, or about $500.

“Citizens has been able to enter into long-term supply contracts that have helped us leverage falling natural gas prices to deliver significant savings to our customers,” said Harrison.

In addition to meeting the demands of customers as a primary heat source, Citizens is also meeting increasing demands for natural gas from Indianapolis Power & Light, which recently converted its second-largest electric generation plant, Harding Generating Station, from coal to natural gas.

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