Local energy officials are likely breathing a sigh of relief today following a decision by the bond rating agency Standard and Poor's to affirm its current rating for PG&E Corp.
The agency decided today to maintain its current rating for Pacific Gas & Electric Co. and Edison International, which owns Southern California Edison Co. The affirmation was made "following the utilities' implementation of cash conservation measures that, to some extent, alleviate the immediacy of their liquidity crisis," according to Standard & Poor's. "These steps provide some additional time for solutions to be crafted and implemented before funds are exhausted."The bond rating affects the price at which the utility can obtain financing, a crucial measure of its financial stability during what is becoming a tumultuous period of energy shortages, skyrocketing prices and consumer outrage over likely rate increases.
Both companies expressed fear at a state Public Utilities Commission meeting in San Francisco Thursday that without rate increases and other financial boosts, they could face bankruptcy.
Standard and Poor's issued a statement yesterday stating that PG&E and Edison face "imminent default" unless regulators and politicians soon find a "viable financial solution" to the energy crisis. Last week, S&P downgraded the credit ratings of the companies and they remain on "CreditWatch" with the strong likelihood that their ratings will be downgraded, especially if they are compelled to absorb the unexpectedly high cost of purchasing power during recent months.
Together, the companies claim to be $8 billion in debt from paying exorbitant rates to wholesale power sellers in order to get the energy needed to supply consumers in California.
The state Public Utilities Commission yesterday asked for proof that Pacific Gas and Electric Co. and Edison International are on the brink of financial disaster before hitting consumers with a rate hike.
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It could be a first step in allowing the companies to charge consumers more, a signal that apparently pleased Wall Street.
"The outcome of the CPUC meeting is viewed as a constructive step toward supportin g the utilities' financial integrity and as sending appropriate signals to the financial community," according to a statement from Standard & Poor's.
Michel Florio, an attorney for The Utility Reform Network, a watchdog group more commonly known as TURN that opposes any rate hikes that would be passed on to consumers, is outraged at the move to raise rates, possibly as soon as Jan. 4. He and others angry about the predicament are expected to protest at a pair of hearings next week.
The emergency hearings, scheduled for Dec. 27 and 28, have been called to determine the veracity of the economic distress claims and to consider allowing a rate increase.
PUC spokesman Armando Rendon declined to speculate on the impact of the bond rating decision today.
"The commission is going to have to deliberate these kinds of matters," he said. "It's one of the areas the commission will be considering."<
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