Fitch: US Utilities, Power & Gas Companies Show Moderate Growth
30 May 2015 - 5:59AM
Business Wire
Median earnings for Fitch Ratings' sample of US utilities, power
and gas companies grew by approximately 3% on a year-over-year
basis, despite unfavorable weather comparisons due to an
uncharacteristically strong winter in 2014. The first-quarter
results confirm the positive trend displayed in 2014 and underscore
a good start to 2015 for the sector.
The vast majority of companies affirmed their 2015 earnings
guidance against a backdrop of relatively encouraging 1Q15
financial results and moderate optimism that the momentum can
continue for the remainder of 2015. Weather normalization,
constructive rate outcomes, cost control and relatively modest net
sales growth continue to be embedded in 2015 expectations.
The benefit of improved local economies in several utility
jurisdictions led to higher industrial sales for the quarter. The
trend was particularly visible for utilities in the southern US
where Southern Co., Entergy Corp. and Duke Energy Corp. continue to
experience ramped-up business activity in their service
territories, keeping a positive momentum on industrial sales in
early 2015.
In general, utilities with operations in oil-dependent service
areas reported no material impact from falling oil prices on
industrial sales. American Electric Power Co. noted that its sales
to the oil and gas extraction sector continue to grow at a steady
pace while Xcel Energy Inc. and CenterPoint Energy reported very
little effect from the low oil price environment on their Texas
operations. Some companies (FirstEnergy and Westar) noted weakness
in steel and certain chemical industries that have been hit from
capex cuts in oil drilling.
Key credit metrics across the sector remain broadly in line with
Fitch's expectations. Coverage ratios continue to be healthy,
supported by utilities' refinancing activities and a persistently
low interest rate environment. Competitive generation companies
showed mixed results with FFO-based ratios moderately weaker and
EBITDAR-based ratios stronger compared with 2014 year-end
ratios.
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch
Wire credit market commentary page. The original article, which may
include hyperlinks to companies and current ratings, can be
accessed at www.fitchratings.com. All opinions expressed are those
of Fitch Ratings.
Off to a Good Start (1Q15 Earnings Calls Wrap-Up)
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866577
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