Moody's Investors Service has upgraded the credit ratings of PSI Energy Co. (PSI), Cincinnati Gas & Electric Co. (CGE), and Union Light Heat & Power Co. The upgrades (em which affect about $3.8 billion in debt securities (em reflect strengthening financial position coupled with low business risks. CGE and PSI are CINergy subsidiaries; Union Light is a wholly-owned subsidiary of CGE.
Since the completion of the PSI/CGE merger last year, Moody's says, both companies have lowered their operating costs, making it more likely that CINergy can achieve its stated goal of $1.5 billion in merger-related savings over a 10-year period. The successful cost-reduction efforts, combined with rate relief given to PSI, has strengthened their financial profiles. According to Moody's, the weaker-than-average financial profiles of CGE and PSI are outweighed by the low business risk associated with the combined operations. In the event of deregulation of the electric industry, Moody's calculates that CINergy will have no exposure to stranded costs, and will become a formidable competitor because of its low production costs. t
Lori A. Burkhart is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.
Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.