Moody's downgrades ConEd

Moody's Investors Service said it downgraded the long-term ratings of Consolidated Edison, Inc. (ConEd) to Baa1 from A3 and its subsidiaries Consolidated Edison Co. of New York, Inc. (Cecony) and Orange and Rockland Utilities, Inc. (O&R) due to a weaker financial profile.

Moody's also said it downgraded Cecony's short-term commercial-paper rating to P-2 from P-1.

The P-2 commercial paper ratings on ConEd and O&R were affirmed.

The outlooks for ConEd, Cecony and O&R are stable.

ConEd's financial profile is weaker due to cash flow headwinds from tax reform, coupled with incremental holding company debt, Moody's said.

ConEd's credit is primarily driven by Cecony since the utility represents roughly 90% of consolidated cash flow, the agency said.

In August, Cecony received some clarity on rate treatment of tax reform via a New York Public Service Commission order, which includes sur-credits for electric and gas revenue in 2019 and amortization of accumulated deferred tax benefits to be determined in an upcoming general rate case, Moody's said.

This means that Cecony will have a series of revenue and cash flow reductions that will offset some of the expected general rate increases that the utility would otherwise have, the agency said.

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