Fitch maintains watch on Scana, subsidiaries

Fitch Ratings said it maintained the issuer default ratings of South Carolina Electric and Gas Co. (BBB-) and its parent Scana Corp. (BB+) on rating watch evolving following the enactment by the South Carolina Legislature of HB4375.

The agency also maintained the BBB- issuer default rating of Public Service Co. of North Carolina on rating watch evolving given the rating linkage with its parent Scana.

Among other provisions, the legislation orders the South Carolina Public Service Commission to cut South Carolina Electric’s and Public Service Co. of North Carolina’s electric rates by 14.8% retroactive to April 1, the agency explained.

Fitch said it considers the magnitude of the cut to be detrimental to the companies’ credit metrics, even after consideration of Scana's 80% reduction of the common dividend.

Despite the Legislature's characterization of the new rate as temporary, the agency said it is concerned that the expected December order could be of the same magnitude.

If so, Fitch said it expects Scana's total adjusted debt/EBITDAR to average around 6 times over the next three years and South Carolina Electric’s to average around 5.7 times, both above the agency’s previously stated downgrade thresholds of 5.5 times and 5 times, respectively.

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