Moody’s: Arizona Public view to negative

Moody’s Investors Service said it affirmed the ratings of Arizona Public Service Co., including its A2 senior unsecured rating, and its parent Pinnacle West Capital Corp., including its A3 senior unsecured rating and revised the outlooks for both issuers to negative from stable.

“The rating action follows APS’ announcement of a new clean energy plan which, although positive from an environmental perspective, will likely result in an increase in near-term leverage and a further decline in cash flow-based credit metrics,” said Laura Schumacher, a Moody’s vice president and senior credit officer, in a press release. “In addition, the plan is being undertaken at a time when APS is under increased scrutiny from its regulator, the Arizona Corporation Commission (ACC), which adds uncertainty to the utility’s ability to recover its investments on a timely basis.”

APS’ clean energy plan includes a goal of being completely carbon free by 2050 with an interim target of 45% renewables penetration by 2030. The plan builds on APS’ already ambitious capital program, which currently involves significant near-term spending on clean generation and includes planned annual expenditures of about $1.5 billion in 2021 versus a pre-2020 average of about $1.1 billion, the agency said.

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