Global Header | Moody's
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

Moody's upgrades Alabama Power to A1 and Gulf Power to A2; outlooks stable

31 Jan 2014

Approximately $8 Billion of Debt Securities Upgraded

New York, January 31, 2014 -- Moody's Investors Service upgraded the long-term ratings of Alabama Power Company (senior unsecured and Issuer Rating to A1 from A2; preferred stock to A3 from Baa1) and Gulf Power Company (senior unsecured to A2 from A3; preferred stock to Baa1 from Baa2). Moody's also upgraded the short-term ratings on Gulf Power's industrial development bonds (to VMIG 1 from VMIG 2) and the senior unsecured debt rating of Southern Electric Generating Company to A1 from A2 based on the unconditional guarantee of this debt by Alabama Power Company. This rating action concludes our review of these companies' ratings initiated on November 8, 2013. The rating outlooks are stable.

"The upgrades of Alabama Power and Gulf Power reflect utility regulatory provisions in Alabama and Florida that are consistent with our view of a generally improving regulatory environment for US electric and gas utilities", said Michael G. Haggarty, Senior Vice President.

RATINGS RATIONALE

The primary driver of today's rating action is Moody's more favorable view of the relative credit supportiveness of the US regulatory framework, as detailed in our September 23, 2013 Request for Comment: "Proposed Refinements to the Regulated Utilities Rating Methodology and our Evolving View of US Utility Regulation." Factors supporting this view include better cost recovery provisions, reduced regulatory lag, and generally fair and open relationships between utilities and regulators. The US utility sector's low number of defaults, high recovery rates, and generally strong financial metrics from a global perspective provide additional corroboration for these upgrades.

In Alabama, the regulatory environment has remained credit supportive despite recent scrutiny of Alabama Power's return on equity and changes to the utility's long standing rate plan that occurred in 2013. In place since 1982, the utility had operated under an Alabama Public Service Commission (APSC) approved Rate Stabilization and Equalization (Rate RSE) plan. Under the most recent structure, APC was allowed to earn an ROE level within a range of 13% to 14.5%.

In January 2013, the APSC declined, by a two-to-one vote, to initiate a formal review of the Rate RSE plan that had been proposed by one of the three commissioners. The APSC instead decided to hold public hearings on the matter and to consider changes to the Rate RSE construct outside of a formal review.

On August 13, 2013, the APSC voted, again by a two-to-one margin, to accept the APSC staff recommendations for a change to the Rate RSE plan to move to a weighted average cost of capital approach. The new Rate RSE eliminates the 13% to 14.5% ROE range and 45% allowed equity ratio and replaces them with an allowed weighted cost of equity ("WCE") range of 5.75% to 6.21%, with an adjusting point of 5.98%. The company can earn an additional 7 basis points if it maintains an A credit rating from one rating agency or is in the top third of a customer value (or service quality) benchmark survey that the APSC staff utilizes. The revised Rate RSE became effective this year with substantially all of the other provisions of the Rate RSE unchanged.

Other key cost recovery provisions in the state are intact as well. The company recovers fuel costs through an Energy Cost Recovery clause (Rate ECR) and has a rate adjustment mechanism in place to recover the costs of placing new generating facilities into retail service under its rate Certificated New Plant clause (Rate CNP). Alabama Power also has established rate adjustment mechanisms to recover environmental capital and operating expenses as well as certified purchased power costs. In addition, fuel rates are adjusted on a forward looking basis. Alabama Power maintains a Natural Disaster Reserve (NDR) for operations and maintenance expenses to cover the cost of damages from major storms to its transmission and distribution facilities, based on an APSC order.

Although the revisions to the Rate RSE were opposed by one commissioner and some other groups in the state, the new Rate RSE provisions have not changed our positive view on the overall credit supportiveness of the Alabama regulatory framework.

In Florida, the political and regulatory environment has improved since base rate proceedings for some other utilities in the state (not including Gulf Power) became highly politicized in 2010. Since that time, there has been an almost complete turnover in the composition of the Florida Public Service Commission (FPSC) , with the current commission viewed as credit supportive. Gulf Power benefits from a FPSC approved fuel cost recovery mechanism that includes a true-up of actual fuel costs, a projection of future costs, and interest on the over/under recovery balance. The mechanism also allows for interim rate adjustments if the end of period over or under recovery exceeds 10% of the projected annual fuel revenues for the period.

In addition, with utilities in Florida vulnerable to hurricane activity, regulatory treatment to address storm costs has also been an important factor supporting Gulf Power's credit quality in storm affected years. The company can petition for recovery of any storm damage costs in excess of its storm reserve to be collected through a storm surcharge. It would then be able to petition for full and permanent recovery of all costs. Securitization legislation for the recovery of storm-related costs is also in place in Florida, although Gulf Power has not pursued securitization of past storm costs.

In December, the FPSC unanimously approved a settlement agreement in Gulf Power's most recent rate case that was consistent with our view of a generally credit supportive regulatory framework in the state. The settlement allows the utility to increase base rates by $35 million in 2014 and an additional $20 million in 2015; and continues its authorized ROE level of 10.25% (the midpoint of range between 9.25% and 11.25%). The settlement includes an adjustment mechanism that would increase the authorized ROE if the 30 year US treasury bond yield increases by a predetermined amount. The utility can accrue an return similar to AFUDC on certain transmission upgrades from 2014 to 2017; and reduce depreciation expense and record a regulatory asset for cost of removal of up to $62.5 million to reach the midpoint of its authorized ROE. Gulf Power may not file for a base rate increase to be effective until after June 2017, unless its actual retail ROE falls below the authorized ROE range.

Rating Outlook

Alabama Power's stable rating outlook reflects the company's generally credit supportive regulatory environment despite recent changes to its longstanding rate plan, our expectation that the company's financial metrics will remain solidly within the A rating range, manageable capital expenditures, and a low business risk profile compared to some peers as it has no plans to construct significant new base load generation over the next several years.

Gulf Power's stable rating outlook reflects our view that the Florida regulatory environment for investor owned utilities has improved and that cost recovery provisions in the state are credit supportive. Although the utility's cash flow coverage metrics are below the parameters typically required for an A2 rating after adjusting for bonus depreciation, this is largely offset by an above average regulatory framework, lack of significant new generation needs, and its position as part of the Southern Company system.

What Could Change the Rating - Up

An upgrade for Alabama Power could be considered if the regulatory framework in Alabama continues to be relatively credit supportive and there is a sustained improvement in key financial ratios above the high end of the A rating category, including CFO pre-W/C to debt ratio above 30%, after adjusting for the impact of bonus depreciation.

An upgrade for Gulf Power could be considered if the utility's regulatory environment and cost recovery provisions remain supportive, if capital expenditures moderate from currently high levels, or if cash flow coverage metrics show sustained improvement, including CFO pre-W/C to debt of at least 27%, after adjusting for the impact of bonus depreciation.

What Could Change the Rating - Down

Alabama Power's ratings could be lowered if there is an adverse change in the regulatory framework for utilities in Alabama, if there is a substantial increase in environmental or other costs that are not recoverable, if cash flow coverage metrics fall to the middle of the A rating category on a sustained basis, including CFO pre-W/C to Debt below 27%.

Gulf Power's ratings could be downgraded if there are adverse political or regulatory developments in Florida that could negatively affect credit quality, if there are additional, unanticipated capital expenditure requirements leading to higher debt leverage, or if cash flow coverage metrics remain significantly below our guidelines for the mid-A rating level, including CFO pre-working capital to debt below 25%, for a sustained period.

Ratings Upgraded

Alabama Power Company

Issuer Rating to A1 from A2

Senior Unsecured to A1 from A2

Preferred Stock to A3 from Baa1

Senior Unsecured Shelf to (P)A1 from (P)A2

Subordinate Shelf (P)A3 from (P)Baa1

Preferred Shelf (P)A3 from (P)Baa1

Alabama Power Capital Trust V

Preference Stock to A2 from A3

Southern Electric Generating Company

Senior Unsecured to A1 from A2

Gulf Power Company

Issuer Rating to A2 from A3

Senior Unsecured to A2 from A3

Preferred Stock to Baa1 from Baa2

Senior Unsecured Shelf to (P)A2 from (P)A3

Subordinate Shelf to (P)A3 from (P)Baa1

Preferred Shelf to (P)Baa1 from (P)Baa2

Short-term Rating to VMIG 1 from VMIG 2

The principal methodology used in these ratings was Regulated Electric and Gas Utilities published in December 2013. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Michael G Haggarty
Senior Vice President
Infrastructure Finance Group
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 Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's upgrades Alabama Power to A1 and Gulf Power to A2; outlooks stable
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Global Footer | Moody's