KEY RATING DRIVERS
Improving Credit Metrics: Credit quality measures have been improving since 2012 due in large measure to rate increases, storm cost recovery and cost control and are supportive of the existing ratings. Over the 2014 - 2015 periods Fitch estimates EBITDA/interest to average about 4.0x, FFO/interest 4.0x and FFO/Debt about 20%. Debt/EBITDA is expected to average a relatively high 4.0x.
Pending Exelon Merger: ACE's ratings are unaffected by the pending merger of its parent Pepco Holdings, Inc. and Exelon Corp. However, by law merger approval requires the BPU to find the proposed transaction is in the public interest, which has been interpreted to mean there must be a positive benefit for rate payers, which will likely require some form of customer credits and/or other concessions that could temporarily reduce earnings and cash flow.
Transmission Rate Challenge: Regulators in
Challenging Regulatory Environment: ACE recently entered into a settlement agreement that provides for a
Manageable Capital Budget: Projected capex of
Consolidated Tax Adjustment: In
Positive Rating Action: Given Fitch's expectation for merger related concessions, positive rating action is not likely during the pending merger review.
Longer term, ratings could be upgraded if Adjusted Debt to EBITDAR fell below 3.75x and FFO coverage increased above 5.0x on a sustained basis.
Negative Rating Action: Ratings could be lowered if Adjusted Debt to EBITDAR increased above 4.25x and FFO coverage below 4.0x on a sustained basis.
Lack of support for utility investments or a change in commodity cost recovery mechanisms could also lead to lower ratings
Additional information is available at 'www.fitchratings.com'.
--'Corporate Rating Methodology' (
--'Recovery Ratings and Notching Criteria for Utilities' (
--'Rating U.S. Utilities, Power and Gas Companies (Sector Credit Factors)' (
Recovery Ratings and Notching Criteria for Utilities
Rating U.S. Utilities, Power and Gas Companies (Sector Credit Factors)
Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage
Source: Fitch Ratings
Most Popular Stories
- Rackspace Ends Talks About Possible Acquisition
- Missouri GM Plant Adding 750 jobs
- Mercedes Rolls Out S550 Plug-in Hybrid
- Cedeno Named USHCC Businessman of the Year
- Parameters Being Drawn for IS Action
- Aaron Hernandez: I Felt Helpless to Refuse Police
- Can Kobach Keep Taylor's Name on Ballot?
- Anheuser-Busch, Visa Voice NFL Disapproval
- Two-thirds of Hispanics Doubt Media Accuracy
- Poverty Rate Drops for First Time Since 2006