Moody’s Investors Service said this week it is maintaining a stable outlook for the U.S. public power sector through the Covid-19 pandemic and resulting economic downturn.


“Public power utilities provide essential services in a nonprofit manner, have strong liquidity [and] continue to deleverage and benefit from cost recovery through self-regulated rate-setting,” the Moody’s team led by senior analyst Jennifer Chang said in a note.

Analysts cautioned, however, that utilities in weaker economic areas or in areas with high concentrations of industrial/commercial activity are more exposed to the downturn, citing that sectors such as the service industry, automobile manufacturing and oil and gas, have seen sharper activity declines.

The Moody’s team said it now expects a net decline in peak load demand for the year, rather than flat growth as previously forecast, due to stay-at-home and essential business-only orders issued across the country, although the pandemic’s impact on load demand has varied widely among the country’s different independent system operators, or ISOs.

“States have enacted these orders at different times and to varying degrees, so some states may see a lag or smaller effect,” researchers said.

Preliminary figures for the first 20 days of April show a 19% decline in load demand versus the four-year average for the New York Independent System Operator (NYISO) Zone J, which covers New York City.

For the Electric Reliability Council of Texas (ERCOT), meanwhile, peak load demand rose 2%.

“Load demand decline has not hit and is not likely to hit all areas of the country in the same manner at the same time, with some states having a lag or lower impact,” analysts said. “For example, Florida and Texas’s demand loads were largely unaffected through March (not weather adjusted).”

The Moody’s team said the stable rating for public power utilities could be revised to negative if stay-at-home orders and the closure of nonessential services remain in effect for an extended period, which “could lead to more permanent significant loss of load as a result of widespread deteriorating economic activity, customer loss and delayed recovery, negatively affecting cost recovery and liquidity beyond 12-18 months.”