S&P Global Ratings raised Mississippi Power Co.'s long-term issuer credit rating to A- from BBB+ and stand-alone credit profile to bbb from bb+, with a negative outlook.
"We are upgrading [Mississippi Power] because it has resolved the operating and regulatory missteps surrounding the Kemper project, and we have restored our view of its former standing within the Southern group given the parental support exhibited through most of the episode," the rating agency said in a March 14 report.
Following years of delays and billions in cost overruns, the Southern Co. subsidiary suspended the project's gasification operations in June 2017 and has since written off over $6 billion of the total $7 billion project cost as unrecoverable. On Feb. 6, 2018, the Mississippi Public Service Commission approved a settlement agreement, allowing Mississippi Power to collect $99.3 million annually from customers to fund Kemper's natural gas facility.
S&P Global Ratings also affirmed its A- issuer credit ratings and all issue ratings on Southern Co., Alabama Power Co., Georgia Power Co., Southern Co. Gas, Pivotal Utility Holdings Inc. and unregulated generator Southern Power Co.
The outlook for the companies remains negative due to "thin financial cushion at the current ratings" and risks connected to the construction of Georgia Power's Vogtle 3 and 4 nuclear reactors.
"We would lower ratings on Southern and its subsidiaries if the construction of the new nuclear units encounters further time delays or significant cost increases without offsetting improvements in its financial profile. We would also lower ratings if [funds from operations] to debt stays permanently below 16% with no projected rebound," S&P said.
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.
