Fitch Ratings on Tuesday assigned or affirmed high ratings and stable outlooks for utilities in the Northwest and Northeast regions, citing low credit risk and strong financial metrics. The stable outlooks were attached to Eugene (OR) Water and Electric Board (EWEB), Energy East Corp., New York State Electric and Gas Corp. (NYSEG), Central Maine Power Co. (CMP) Connecticut Natural Gas Corp. (CNG) and Southern Connecticut Gas Co. (SCG).
Fitch assigned an “A+” rating to EWEB’s $12.765 million electric revenue bonds, Series 2006, citing strong credit quality for the public sector utility tied to its “low-cost power supply, solid financial position, and sound risk management practices.” Fitch concluded that since the 2001 western wholesale power market meltdown, EWEB has “improved its financial performance” with stronger cash reserves and greater liquidity.
“EWEB’s financial position is expected to remain strong as it continues to build an additional $20 million in reserves over the next few years, which will be spent on capital projects for 2009-11,” Fitch said.
In the Northeast, the rating agency found “strong credit metrics, along with the demonstrated track record of hedging the commodity risk” for NYSEG, which gives retail customers as “fixed-price option” as protection against volatile future energy prices. Fitch’s main concern for the large New York combination utility is its current $91.6 million rate increase request before the state regulatory commission that includes a request to continue the fixed-price option.
For Rochester’s utility and the Connecticut and Maine utilities, Fitch repeated the assessment that “low business risk profiles and strong credit ratios” led to all of them having ratings affirmed at the “BBB-” to “BBB+” levels. For Energy East, a natural gas and electric utility holding company with operations in New York and Maine, Fitch saw ratings affirmation reflecting the “relatively stable nature” of the utilities, although for all of 2006 the rating agency saw a “slight weakening” in the company’s overall financial metrics.
Generally, Fitch did not see the Eastern utilities having a lot of exposure to commodity prices and volumetric risk, but some, such as Connecticut Natural Gas, are under financial review by the state regulators and anticipating filing new rate cases later this year.
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