Moody's changed the rating outlooks on Consolidated Edison Inc., Consolidated Edison Co. of New York Inc. and Orange and Rockland Utilities Inc. to negative from stable "due to an expectation for weaker financial metrics in the presence of higher political and regulatory risks."
The rating agency affirmed the long-term and short-term ratings of the companies.
The negative outlook for Consolidated Edison Co. of New York, or CECONY, reflects a negative impact its financial metrics will have if the New York Public Service Commission approves the settlement the utility reached with the commission staff in October. The three-year rate plan reduces the return on equity by 20 basis points compared to the current rates.
CECONY accounts for 85% of Con Ed's reported revenues, and any financial hit to the utility directly impacts the parent.
"ConEd's financial metrics are weakening over the next several years, driven by recent rate case developments at its largest subsidiary, CECONY" said Ryan Wobbrock, Moody's vice president and senior credit officer. "The combination of customer credits related to tax reform, reduced earnings power and rising debt to fund sizeable infrastructure investments is further pressured by the appearance of higher political intervention, relative to comparable utilities in other states."
Orange and Rockland's negative outlook reflects weak financial metrics resulting from its last rate case, approved by the New York regulator in March, and the possible outcome of its rate case in New Jersey. The utility's New Jersey rate case calls for an increase of about $20 million. New Jersey accounts for 25% of Orange and Rockland's rate base.
The ratings could be downgraded if key financial ratios were to persist at lower levels, the rating agency said in a Dec. 23 action.