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Moody’s reviews two National Grid subsidiaries for downgrade
Moody’s Investors Service said it placed the A3 issuer and senior unsecured ratings of the Brooklyn Union Gas Co. and KeySpan Gas East Corp. on review for downgrade. The two companies are ultimately owned by National Grid plc.
Moody’s cited a Nov. 12 letter from New York’s governor to National Grid’s CEO that he plans to have the public service commission revoke National Grid’s certificate unless certain steps are taken.
“The rating action reflects social and governance risks around customer relations and broader stakeholder engagement. The strongly worded letter was the culmination of a public disagreement that commenced in May 2019 and has escalated significantly since 11 October. In May 2019, National Grid placed a ‘moratorium’ on new gas customer connections (and increases in demand) in downstate New York citing supply constraints. The decision to introduce a moratorium followed the second denial of the necessary water permits for a new pipeline (the Northeast Supply Enhancement Project, proposed by The Williams Companies, Inc. [Baa3 stable]) designed to significantly increase supply capacity. Moody’s note that National Grid was not the only utility in downstate New York that imposed such a moratorium. However, it appears it has been singled out because of (1) a perception by the New York governor that it did not look at finding alternative (short and medium term) measures to manage the supply constraints, absent the pipeline, such that the moratorium could be lifted; and (2) its poor handling of the moratorium with its customers,” said Moody’s in a press release.
Moody’s said it expects National Grid to respond with proposals within the 14 days.
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