Fitch Ratings on Dec. 19 upgraded SCANA Corp. and its subsidiaries South Carolina Electric & Gas Co. and Public Service Co. of North Carolina Inc. to BBB from BB+, with positive rating outlooks.
The upgrades were prompted by the recent decision by the Public Service Commission of South Carolina to conditionally approve Dominion Energy Inc.'s $14.7 billion acquisition of SCANA.
"Today's upgrade takes into consideration the benefits of [SCANA]'s ownership by a larger and better capitalized parent company, including the expectation that [Dominion] will bolster SCE&G's capital structure to regulatory levels," Fitch analysts wrote in a report.
Fitch added that the ratings reflect its expectations of a resolution for the legal and regulatory issues in the wake of SCE&G's abandonment of the V.C. Summer nuclear expansion project.
"As a result, Fitch expects SCE&G's credit metrics to return to levels commensurate with 'BBB' rated utilities. Fitch expects to resolve the Positive Outlook upon demonstration of an improved South Carolina regulatory relationship, including the next base rate filing," Fitch analysts wrote.
The rating agency anticipates the transaction will close shortly after the written order has been issued, which is expected by Dec. 21.