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Global Credit Research - 07 Nov 2012
New York, November 07, 2012 -- The three New York area investor-owned electric transmission and
distribution utilities hardest hit by Hurricane Sandy are well positioned
to absorb the costs of the devastation and clean-up with their
credit quality intact, says Moody's Investors Service.
Although restoration costs could be substantial, likely reaching
into the billions of dollars, the storm will not lead to negative
rating actions on these utilities.
The investor-owned utilities Hurricane Sandy hit hardest were Consolidated
Edison Company of New York, Inc. (CECONY, A3 stable),
Jersey Central Power & Light (JCPL, Baa2 stable) and Public
Service Electric and Gas Company (A3 stable), each of which had
over one million customers out of service because of the storm.
Connecticut Light & Power Company (CL&P, Baa2 stable) also
reported extensive outages.
Moody's profiles how Sandy affected each of these utilities and
the reasons for supporting their existing ratings in the report "Sandy
Hits New York Area Investor-Owned Utilities Hard But Leaves Credit
Quality Intact."
"These utilities are able to absorb the extraordinary costs and
operational stress of the storm because of their sound financial position
and adequate liquidity," says Moody's Vice President
and Senior Credit Officer Mihoko Manabe. "The utilities also
have a range of authorized regulatory mechanisms that should allow them
to recover their storm restoration costs in a timely manner, which
supports credit."
The magnitude of the storm damage will test customer's patience
with the estimated time for restoration. A slow restoration response
will politicize the cost recovery process, says Moody's.
Post-mortem investigations on the utilities' storm response by
regulators are routine, but the utilities most vulnerable to scrutiny
are CECONY, which will soon file a rate case, and JCPL and
CL&P, which need to improve on their performance in responding
to last year's storms.
The full cost of Hurricane Sandy will not be clear for a few months,
says Moody's, as utilities rush to connect their remaining
customers still in the dark and cold. Revenues will be moderately
lower because of reduced electricity sales caused by the outage,
while costs and capital investment will be higher to pay for restoration
costs.
The nor'easter currently bearing down on the East Coast could also
add to already elevated storm costs.
Moody's research subscribers can access this report at http://www.moodys.com/research/Sandy-Hits-New-York-Area-Utilities-Hard-But-Leaves-Their--PBC_147069.
***
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Mihoko Manabe
VP - Senior Credit Officer
Infrastructure Finance
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
William L. Hess
MD - Utilities
Infrastructure Finance
JOURNALISTS: 212-553-0376
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Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
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Moody's: New York area investor-owned utilities' credit quality intact after Sandy
No Related Data.
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