The major bond and credit rating agency Standard & Poor’s has improved its outlook for the V.I. Water and Power Authority’s electric system revenue bonds, revising it to stable from negative this week, according to the agency.

At the same time, Standard & Poor’s affirmed its ‘BBB-‘ senior-lien rating and its ‘BB+’ subordinate debt ratings on the bonds, citing the utility’s success with converting from oil to multi-fuel generation and with getting new sources of power online.

"The outlook revision reflects our view of the improved competitive position from recent rate cuts and the progress that the authority has made in diversifying its outlook for energy costs," said Standard & Poor’s credit analyst Peter Murphy in a statement from the agency.

According to the press release, WAPA has made strides in its plan to reduce oil dependence in its generating fleet by converting two plants to burn propane, by seeking to improve efficiency at its plants and in its distribution network, and by adding renewable energy.

Fuel costs accounted for about 72 percent of 2014 operating expenditures, which is up from about 62 percent in 2004 but slightly lower than more recent years, according to the agency. Generally high oil prices have stressed the authority’s financial performance, due to the lag in recovering fuel costs quickly from electric customers.

Failure to recover fuel costs fully and in a short time frame affected debt service coverage, according to Standard & Poor’s. But the recent decline in oil prices has improved WAPA’s cost profile.

The stable outlook "reflects our view that, while rates remain high, the recent drop-off in levelized energy adjust clause rates and improved competitive position will be favorable for collections and electricity demand.”

“Given the decline in oil prices, and the expected drop in the authority’s exposure to oil price swings, we expect near-term financial pressures to moderate. However, if the economic or oil price situations weaken, there could be downward pressure on the rating or outlook," the agency said.

Because WAPA has a high-debt burden, rates and receivable balances, the agency does not expect the rating to rise in the next year.