Research Recap submits:
Credit quality for U.S. electric utilities remains strong despite rising fuel and construction costs, according to Standard & Poor’s.
Capital expenditure budgets are ratcheting upward, buffeted by double-digit increases in construction material costs and a tight labor market, S&P says in its latest Industry Report Card. “Additional cost pressure from rising fuel costs is a growing credit concern. To date, regulatory decisions have been supportive of the commodity pass-through via adjustments mechanisms. Still, the potential for regulatory fatigue is heightened as costs show no signs of abating in the near term and longer-term environmental compliance recovery will likely pressure customer rates.
Credit quality for the regulated U.S. electric utility industry is well positioned for the remainder of 2008, given supportive regulatory environments, strong liquidity positions, and market access and appetite for debt securities for the sector as a whole.
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