Following the announcement of Spain’s National Commission on Markets and Competition (CNMC)’s plans for the new regulatory period, S&P Global Ratings’ Massimo Schiavo and Gerardo Leal gave an exclusive comment to Infrastructure Investor on the impact of the update on the credit quality of utilities in the country.
“This is harsher than we were expecting,” said Schiavo of the regulatory review, which could see revenues reduced by up to 22% for gas distribution and transmission companies.
Please click here for the full article (behind paywall).
Last week, U.K. water regulator Ofwat confirmed its plans to sharply reduce the returns available to water companies over the next five years.
S&P Global Ratings’ director Matan Benjamin comments that the proposals will result in a cut in allowed cost of capital in real terms to around 2.2% from 3.4% in the current regulatory period. He continues that the latest announcement from Ofwat “provides another indication that the next regulatory period for water utilities could be challenging”.
Following outreach by Moorgate, the comments were covered by InfraNews (behind paywall) and Environment Analyst (requires subscription).
Regulatory reset risk is high for U.K. utilities, with an updated regulatory framework for water companies coming into effect from April 2020. This will be followed by gas and electricity transmission and gas distribution networks the following April, with a reset for electricity distribution scheduled for 2023.
In its recent report, S&P Global Ratings outlines the outlook for water, gas and electricity transmission and gas distribution, and electricity distribution networks. One key takeaway is that S&P Global Ratings believes that political, competitive and regulatory pressures may gradually undermine the credit quality of some U.K. utilities.
Following outreach by Moorgate, news of the report was covered by WaterBriefing, Environment Analyst, Infrastructure Investor, and Partnerships Bulletin.
Following California’s devastating Camp Fire in late 2018 and PG&E’s resulting filing for bankruptcy some months later, Gabe Grosberg, Senior Director and North America Regulated Utilities Sector Lead at S&P Global Ratings, comments on what could lie ahead for California’s other investment grade-utilities for Utility Dive.
“Pressure on the state’s utilities isn’t over,” warns Grosberg. “In the absence of regulatory change, it’s possible that another electric utility could face trouble during the 2019 wildfire season. And, depending on the magnitude and severity of the repercussions, the boards of other California utilities could file for voluntary bankruptcy before year-end 2019.”
The full article can be found here.
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