S&P Revamps Public Power Rating Scale

Fortnightly Magazine - September 15 1997
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Standard & Poor's has revised its business profile scale for public power agencies to give investors more details to figure out each rated utility's ability to compete in a deregulated market.

It expanded its five-point scale to a 10-point scale, similar to the rating system used for investor-owned utilities. A "1" rating is the "most capable of competing," so that investors can better gauge a public power's ability to meet competitive challenges and market developments, such as separation of generation and transmission facilities.

Utilities that score between 5 and 8 are likely to face formidable challenges. "It is these utilities' costs structures and wholesale and retail rates that show the greatest disparities with expected market rates," according to S&P.

The most favorable business profile scores run from 1 to 4. The wires business is expected to lead these companies.

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