Fixed Income Quarterly—Gas & Electric Utilities
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(i) a supportive regulatory regime in Alberta, including the performance-based regulatory period that commenced Janu- ary 2013; (ii) economies of scale due to the company’s size- able customer base, which increased to 518,000 in 2013 from 391,000 in 2003; (iii) the company’s manageable volume risk and lack of commodity price risk; and (iv) continued support from parent company, Fortis Inc., amidst a large ongoing capex program. DBRS expects to upgrade the rating to “A” follow- ing a decision on the capital tracker application (assuming the decision does not materially impact the company’s credit profile), which will be re-filed in May 2014. A final decision is expected by the end of 2014.
On January 27, 2014, S&P revised its outlook on AltaLink Investments L.P. (AILP) and its subsidiary AltaLink L.P. (ALP) to Stable from Negative. The agency also affirmed the
Table 3: Corporate Credit Ratings – Utilities
ratings on the companies at BBB- and A-, respectively. S&P forecasts a decline in ALP’s capital program over the next two years and expects a reduced reliance on SNC-Lavalin Group Inc. to provide equity injections. The agency also stated that “although we continue to expect timely equity injections from SNC sufficient to maintain AILP’s consolidated balance sheet, metrics are robust enough to maintain the aggressive financial risk profile without them.” S&P expects equity injections into AILP of approximately $300 million in 2014 and $60 million in 2015, with no required injections thereafter.
Table 3 sets out the credit ratings for the Utility corporate credit universe.
Issuer Credit Ratings - Gas and Electric Utilities Universe
DBRS S&P Moody's
Issuer Rating Outlook Rating Outlook Rating Outlook
Algonquin Power Co. BBBL Stable BBB
AltaGas Ltd. BBB Stable BBB
AltaLink Investments, L.P. BBB Stable BBB- AltaLink, L.P.1 A Stable A- ATCO Ltd. AL Stable nr Brookfield Renewable Energy Partners LP BBBH Stable BBB Canadian Utilities Ltd. A Stable A Capital Power L.P. BBB Stable BBB- CU Inc. AH Stable A Emera Inc. BBBH UR-Developing BBB+ Enbridge Gas Distribution Inc. A Stable A- Enersource Corp. A Stable A EPCOR Utilities Inc. AL Stable BBB+ Fortis Inc. AL UR-Developing A- FortisAlberta Inc. AL Positive A- FortisBC Energy Inc. A Stable nr FortisBC Inc. AL Stable nr Gaz Metro Inc.1 A Stable A+ Hamilton Utilities Corporation nr nr Hydro One Inc. AH Stable A+ Hydro Ottawa Holding Inc. A Stable A
1
Maritime Electric Company, Limited nr A
1
Newfoundland Power Inc. A Stable nr
Nova Scotia Power Inc. AL Stable BBB+ PowerStream Inc. A Stable A Toronto Hydro Corporation AH Stable A
TransAlta Corporation BBB Stable BBB- Union Gas Ltd. A Stable BBB+
Windsor Canada Utilities Ltd. nr
Stable nr Stable nr Stable nr Stable nr
nr Positive nr Stable nr Stable nr Stable nr Negative nr Stable nr Stable nr Positive nr Negative nr
Negative Baa1 Stable A3 Negative Baa1 Negative
Stable nr nr
Negative A1 Stable Stable nr
Negative nr
A2 Stable Negative nr
Stable nr
Stable nr
Stable Baa3 Negative
Stable nr A Stable nr
As at March 31, 2014
*Ratings are those of senior unsecured obligations or long-term corporate family rating Notes: (1) Ratings are those of senior secured debt
Sources: DBRS, Standard and Poor’s and Moody’s.