While generally the investment-grade utilities and power companies represent a majority of the latest annual rankings from Standard & Poor’s Ratings Services, vertically integrated utilities for the most part get average or below-average ratings on a 1-to-10 scale for their respective business profiles. S&P released the listing last Friday, noting that within one of five industry sub-sectors, the companies were ranked by their relative corporate credit rating and outlook, then by their relative credit strength within the same rating and outlook profile.

Most of the outlooks are “positive” or “stable.” Those that aren’t are either “negative” or “developing.” A positive outlook indicates S&P may raise the company’s ratings in the future, conversely a negative means it may lower it. The categories are: (a) transmission/distribution gas and electric; (b) transmission-only gas and electric; (c) integrated electric/gas combination utilities; (d) diversified energy and nonenergy companies; and (e) energy merchants/developers/trading-marketing.

Among the 22 companies listed under the latter category, in which bankrupt Calpine Corp. was listed last without an outlook designation, 11 had negative or developing outlooks and all had below-average or low ‘business profiles” which carry a 1-to-10 scale with 1 being the highest, and are suppose to measure their level of future vulnerability in terms of trouble..

All of the merchant, development, and trading companies had business profiles of below average or much worse. The highest rating was a “5” by KeySpan Generation, which had an “A” credit rating, but negative outlook. Duke Energy Trading/Marketing has a BBB-/Stable rating and outlook, but the absolute worst business profile of a “10.” Edison International, whose stock and major utility are relatively highly rated, nevertheless saw its still-debt-plagued merchant operations, Edison Mission Energy, rated a “9” for its business profile.

No vertically integrated utility or energy company with trading operations is rated higher than average in this area, said Richard Cortwright, a New York-based S&P analyst who helped compile the rankings. Category leaders included Nicor and Nicor Gas under regulated T&D companies, followed by companies such as Northwest Natural in Portland, OR, Washington (DC) Gas Light among others.

For transmission only, American Transmission Co. and the Midwest Independent Transmission System Operator led the pack; in integrated gas-electric, Madison (WI) Gas & Electric Co., led with Southern Company and George Power Co. the next two. For diversified energy and nonenergy companies, WPS Resources and FPL Group, Inc., were the top two, respectively. And for energy/development/trading, KeySpan and Southern Power Co. were the first two.

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