Credit ratings agency downgrades SDG&E and other California utilities over wildfire concerns
"We believe that no
SDG&E's rating outlook was listed as stable.
On the same day, Moody's also downgraded
The rating outlook for SCE was revised from negative to stable but
"While Moody's downgraded SDG&E one notch," SDG&E's vice president of state government affairs and external affairs,
The lower a company's credit rating, the more it pays when borrowing to make investments. In the case of a utility, that typically means the higher costs are passed on to ratepayers.
Why did it happen?
In all three reports, Moody's cited the legal doctrine known as "inverse condemnation" as a primary reason for the downgrades.
As inverse condemnation has been interpreted in
According to a
In the recently completed legislative session in
The effort fell short, but in the wake of devastating
The bill's provisions include:
* for fires ignited in 2017, utilities can issue bonds to help pay wildfire damages, with a surcharge paid for by customers to help cover interest payments,
* having the
* in cases in which electrical infrastructure started a fire, starting next year, the CPUC would determine whether a utility acted reasonably, given the circumstances. If so, costs can be passed along to ratepayers.
Should Gov.
While Moody's vice president
"All these different
Toney said his organization is not philosophically opposed to making changes to inverse condemnation but wants to make sure it is replaced with something better.
"Unless you talk about a proposal that looks at protecting everybody, then maybe people are willing to talk about doing something," Toney said. "But simply getting rid of (inverse condemnation), taking away a safety net that people depend on and replacing it with nothing? I just don't know if that's right in this environment."
Long-term concerns
In addition to ratings agencies, investors have concerns about the long-term financial health of
Before a string of deadly wildfires broke out in
It's been estimated
In its report downgrading
SCE, whose service territory includes last year's massive
Since the 2007 catastrophic fires in
The measures funded by ratepayers include putting more power lines underground, replacing wooden power poles with flame-resistant steel poles and creating the nation's largest utility-owned weather network in fire-prone areas.
"That's why this wildfire liability matter needs to be fixed so customers don't pay more for projects they want," SDG&E's Mitchell said.
Moody's attributed SDG&E's wildfire prevention programs and its smaller service territory in comparison to SCE and
SDG&E spent
(619) 293-1251 Twitter: @robnikolewski
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