Fitch cuts Georgia Power, Southern Co.

Fitch Ratings said it downgraded Georgia Power Co.’s long- and short-term issuer default ratings by one notch to A-/F2 from A/F1.

The downgrade reflects execution risk associated with the construction of the Vogtle 3 and 4 nuclear units and weaker credit metrics.

The ratings were removed from rating watch negative and assigned a negative outlook given the FFO pressures caused by tax reform, which will further depress the credit metrics absent any regulatory mitigation.

Fitch also downgraded Southern Co.’s long-term issuer default rating one notch to BBB+ from A- given the nuclear construction risks at Georgia Power, its largest subsidiary, and overall weaker consolidated credit metrics following the Vogtle go-ahead and adverse impact of tax reform.

The agency removed Southern’s rating from watch negative and assigned a stable outlook, reflecting management's commitment to issue on average $1.5 billion of equity annually over 2018 to 2022 to support credit metrics and defend its credit ratings.

In addition, Fitch affirmed Mississippi Power Co.’s long-term issuer default rating at BBB, removing it from rating watch negative and assigning a positive outlook. The affirmation reflects the resolution of all outstanding rate issues with the abandoned Kemper Integrated Gasification Combined Cycle (IGCC) plant and restoration of credit metrics commensurate with BBB rating.

Finally, the agency affirmed the ratings of all other Southern Co.’s subsidiaries with a stable outlook.

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