NEW YORK--(BUSINESS WIRE)--Fitch Ratings has published its second U.S. Utilities, Power & Gas handbook, which provides detailed information for the integrated utility companies (IUCs) in Fitch's universe. Each company report includes rating rationales and rating drivers along with debt structures and financial summary information.
The IUC sector has typically enjoyed strong investment-grade ratings, with the historical median centered at 'BBB+' for Fitch's coverage. Key rating drivers include supportive regulatory framework, declining commodity prices that have alleviated pressure on customer bills, waning capex, low inflation and low interest rates. Many IUCs have been successful in minimizing the regulatory lag through timely resolution of rate cases and rider recovery of various capital and operating costs. A low-commodity environment has been a boon to IUCs, providing headroom to seek rate recovery for nonfuel-related costs without pressure on retail bills.
However, the sector is not without challenges including stagnant sales growth prospects, tightening environmental regulations leading to material shifts in fuel mix, elevated capex that is expected to bring upward pressure on customers' bills, and declining returns on equity. The expiration of bonus depreciation is also likely to increase FFO-adjusted leverage toward the upper end of its historic range. While Fitch believes these headwinds are manageable, a significantly higher-than-expected acceleration in the appreciation of natural gas prices and interest rates and the execution risk associated with large capex and attendant cost-recovery issues could lead to weakening credit trends.
The report, which has detailed information for 44 IUCs is available on the Fitch web site at 'www.fitchratings.com'.
Additional information is available at 'www.fitchratings.com'.
U.S. Integrated Electric Utilities Handbook (A Detailed Review of Integrated Electric Utilities)