S&P says US public power sector healthy

S&P says US public power sector healthy, but challenges lie ahead

Washington (Platts)--15Sep2004


Although the US public power sector has used conservative budgeting, along
with increased hedging activity to mitigate its exposures to volatility in
commodity markets to craft surprisingly stable credit ratings, it faces
significant challenges in the years ahead, Standard & Poor's said in a report
earlier this week. Resource adequacy, difficulties in electricity production,
rising spot coal prices, natural gas price levels and volatility, and exposure
to counterparty risk are presenting challenges to the sector, S&P said. But
compared with the investor-owned and merchant sectors, public power "has
continued to experience overall credit stability, and even slight improvement,
this year, with 10 upgrades and two downgrades." S&P said it has 246 ratings
in the public power sector, with the overwhelming majority being investment
grade, while just five are below investment grade.

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