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Assessing U.S. Vertically Integrated Utilities? Business Risk Drivers Sep 06
Standard & Poors, Sep 2006
Abstract
The methodology that Standard & Poor's Ratings Services uses to rate vertically integrated electric, gas, and combination investor-owned utilities in the U.S. is based on the same precepts that we have used for many years, though the emphasis has changed as the utility industry has evolved. The fundamental methodology encompasses two basic components--business risk and financial risk--and their relationship. Where a utility presents a strong business risk profile, the financial profile can be less robust for any given rating. Likewise, where a utility's business risk profile is weaker, its financial performance must be stronger for any given rating. For combination utilities, the gas operations may have a stabilizing influence on credit quality, but since the electric business is typically significantly...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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