NEW YORK--(BUSINESS WIRE)--Fitch Ratings has published the second edition of U.S. Transmission and Distribution Handbook providing detailed information for utility distribution companies (UDCs) in Fitch's coverage universe. The UDC sector comprises electric transmission and distribution (T&D) utilities as well as natural gas local distribution companies (LDCs). Each company section includes rating rationales and rating drivers along with debt structures and financial summary information.
The UDC sector has typically enjoyed strong investment-grade ratings, due in large measure to lower operational risks than those faced by integrated utilities, ongoing regulatory support for investments in T&D infrastructure and pipeline replacement and safety programs at the LDCs, and a rising proportion of investments regulated by the Federal Energy Regulatory Commission (FERC), which Fitch typically deems more supportive than state regimes.
However, the sector is not without challenges, including stagnant sales growth prospects, elevated capex that is expected to lead to pressure to raise customers' bills, and declining returns on equity (ROE). State-authorized median ROEs declined to 9.55% in 2015, compared to 9.7% in 2014, and a flurry of challenges to FERC-authorized ROEs is clouding earnings visibility of UDCs with significant FERC-regulated transmission assets. While Fitch believes these headwinds are manageable, a significantly higher-than-expected increase in natural gas prices, interest rates and the general level of inflation could lead to noticeable shifts in the credit profile of UDCs.
The report "U.S. Transmission and Distribution Utilities Handbook - A Detailed Review of Electric and Gas T&D Utilities (Second Edition)" is available on the Fitch web site at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at www.fitchratings.com
U.S. Transmission and Distribution Utilities Handbook (A Detailed Review of Electric and Gas T&D Utilities ￢ﾀﾔ Second Edition)