S&P Global Ratings has published a report examining the contributing factors to Pacific Gas & Electric filing for bankruptcy in the aftermath of California’s devastating Camp Fire in late 2018. The report outlines how regulatory uncertainties with the state’s current utility liability legislation can essentially position a utility as the state’s reinsurer against wildfire damage, even if they are not found to have been negligent.
“We don’t believe that an electric utility is large enough, sufficiently diversified, or adequately capitalised to be a reinsurer,” says S&P Global Ratings analyst Gabe Grosberg. Without regulatory reform, S&P Global Ratings has said the ratings on California’s other utilities could fall below investment grade before the 2019 wildfire season begins.
S&P Global Ratings’ analysis was covered by Bloomberg, Governing, Natural Gas Intelligence (requires subscription), Energy Manager Today, Business Insurance and Politico.
In its “Industry Top Trends 2019” reports for North America’s regulated utilities and merchant power, S&P Global Ratings found that the utility sector’s credit outlook is stable – with both regulated providers and independent power producers likely to see low levels of growth next year.
The reports also found that North American utility industry weaker credit measures from tax reform will likely persist in 2019, reflecting tax-related rate reductions carryovers. However, some utilities will likely offset this reduced revenue with further equity infusions or asset sales.
Following Moorgate’s outreach, Utility Dive covered the news