Moody’s revises ConEd view to negative

Moody’s Investors Service said it affirmed the long-term of Consolidated Edison, Inc. and its subsidiaries: Consolidated Edison Co. of New York, Inc. and Orange and Rockland Utilities, Inc. The rating outlooks for each company have been changed to negative from stable due to an expectation for weaker financial metrics in the presence of higher political and regulatory risks.

“ConEd’s financial metrics are weakening over the next several years, driven by recent rate case developments at its largest subsidiary Cecony” said Ryan Wobbrock, a Moody’s vice president and senior credit officer, in a press release. “The combination of customer credits related to tax reform, reduced earnings power and rising debt to fund sizeable infrastructure investments is further pressured by the appearance of higher political intervention, relative to comparable utilities in other states.”

Cecony’s October rate case settlement, if approved by the New York Public Service Commission, could keep the utility’s cash flow at or below $3 billion over the next three years. Debt also is expected to exceed $18 billion, in part to help fund infrastructure investment. As such, Cecony’s ratio of cash flow to debt is expected to be in the range of 14-17% over the next three years, which is weak for an A-rated, low-risk transmission and distribution utility, Moody’s said.

Moody’s sees greater uncertainty in the state’s political environment, following the governor’s verbal, and in the case of two National Grid plc (Baa1 stable) utilities, written threats to revoke utility operating licenses. Although the political intervention appears to have been triggered by natural gas moratoriums levied by the utilities for some service areas, Moody’s had not previously incorporated the level of rhetoric included in the governor’s letter in the credit analysis of those utilities. Moody’s said it notes Cecony has also been publicly reprimanded by the governor due to 2019 summer blackouts in Manhattan and Brooklyn.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.