Fitch: Ratings Stability for U.S. Utilities, Power, and Gas Despite Worrisome Load Growth Trends
NEW YORK - (BUSINESS WIRE) - Fitch Ratings' 2013 outlook for the U.S. Utility Parent Companies and Investor Owned Utilities is stable, despite modest deterioration in operating environment due to sluggish sales. Low power prices create a benevolent backdrop of low customer rates, thus providing headroom for utilities to seek rate increase to recover still elevated capital expenditures. Strong capital market access and ample liquidity further support the stable outlook.
Fitch's 2013 outlook for the competitive generation companies is negative reflecting a slow recovery in power prices, intensifying retail competition, continued stringent environmental policies, and uneven access to capital markets. The affiliated generation companies are at the highest rating risk unless managements proactively reduce leverage. This, in turn, presents rating pressures for the parent companies with competitive generation subsidiaries.
Fitch expects sector EBITDA to grow in 2013 as regulated utilities earn a return on the significant capital investments made in preceding years. However, FFO is expected to decline as the temporary boost from bonus depreciation and other tax incentives fades. The FCF profile, while still a deficit, improves in 2013 as projected capex falls from the 2012 peak.
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