Dive Brief:
- The public power sector will remain stable in 2015, according to Moody's Investor Services, as measures of debt-service coverage and liquidity will be similar to those in 2014.
- Improvements to the economy will also help utilities maintain their credit metrics as required changes in rates are likely to meet more tolerance.
- Declines in power demand would imply utilities will be borrowing less in order to build new capacity, Moody's said, so leverage is unlikely to significantly increase in 2015.
Dive Insight:
Moody's has released its "2015 Outlook — US Public Power Utilities" report and finds the outlook stable in part due to the nature of unregulated rates and improvements to the U.S. economy. Though the report also notes that uncertainty over the ability of public power electric utilities to comply with proposed federal carbon rules are an evolving, long-term risk to the outlook.
"The main reason for our stable outlook is public power electric utilities' unregulated ability to establish electricity rates," said Moody's Senior Vice President Dan Aschenbach.
Moody said it expects the median fixed-charge coverage ratio for rated public power electricity generators will hold steady at about 1.6x and that median days cash on hand will remain at 174 days, roughly in line what they have been in 2014.
"Environmental compliance and systems reliability projects will remain a major focus of new capital improvement programs," Aschenbach said.
