S&P Global Ratings on Sept. 13 downgraded Hydro One Ltd. and its subsidiary Hydro One Inc.'s issuer credit ratings to A- from A, reflecting the impact of recent legislation by the government of Ontario regarding executive compensation.
The provincial government recently implemented legislation requiring Hydro One Ltd.'s board of directors to establish a new executive compensation framework for the board, CEO and other executives within six months. The policy also amends the Ontario Energy Board Act, requiring the Ontario Energy Board to exclude any compensation paid to the CEO and other executives from consumer rates.
In S&P Global Ratings' view, the legislation has weakened Hydro One Ltd.'s management and governance structure, as a result of the government's decision to exert its influence on the utility's compensation structure, which could potentially promote the interests and priorities of one owner above those of other stakeholders.
The rating agency also downgraded the issue level rating on Hydro One Inc.'s senior unsecured debt to A- from A, and lowered the rating on its commercial paper program by one notch to A-2 on the global scale, and to A-1 (Low) from A-1(MID) on the Canadian National Scale. All ratings remain on CreditWatch with negative implications.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.