Moody's Investors Service has confirmed the debt ratings of California's three largest IOUs (em Pacific Gas and Electric Co. (PGE: Sr. Secured A2), San Diego Gas and Electric Co. (SDG&E: Sr. Secured A1), and Southern California Edison Co. (SCE: Sr. Secured A2) (em following passage of AB 1890, the California legislature's restructuring bill.
Moody's says that legislative endorsement of stranded-cost recovery is a favorable development for utility creditors, but notes that ultimate recovery depends on regulatory approval. Although the three utilities submitted their respective stranded-cost estimates on August 30, Moody's expects other parties to the PUC's restructuring proceeding to offer alternative stranded cost estimates. Thus, while the legislation provides assurance that stranded costs will be recovered, the actual definition and quantification of stranded costs remains subject to the uncertainties of California's regulatory process.