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Moody's downgrades American Transmission on lower base ROE

Moody's on Dec. 9 lowered American Transmission Co. LLC's issuer rating to A2, with a stable outlook, from the previous rating of A1.

The downgrade follows FERC's Sept. 28 ruling that the base rate of return on equity, or ROE, for most transmission-owning members of the Midcontinent Independent System Operator Inc. is unjust and unreasonable and should be reduced to 10.32%.

"The downgrade reflects our expectation that ATC's financial profile will be weaker than historical levels going forward primarily due to lower FERC allowed ROEs and better positioned for the A2 rating category," senior analyst Jeffrey Cassella said.

ATC's commercial paper rating was affirmed at Prime-1.