Moody's cuts ratings on 3 California utility projects, may cut 3 more

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Posted at 8:57 a.m. PST Monday, Jan. 8, 2001

Moody's cuts ratings on 3 California utility projects, may cut 3 more

NEW YORK, (Reuters) - The project debt ratings for three California utility projects were cut on Monday, and the ratings for three others were put on review for downgrade, as the California utility crisis worsens, Moody's Investors Service said on Monday.

Moody's cut its ratings for Edison Mission Energy Funding Corp., FPL Energy Caithness Funding Corp. and Salton Sea Funding Corp. to ``Baa3,'' its lowest investment-grade rating, and kept them on review for downgrade.

It also said it may cut its junk-grade, ``Ba1'' and ``Ba2'' ratings for Caithness Coso Funding Corp., and its ``Baa3'' ratings for CE Generation LLC and Juniper Generation LLC.

Moody's said all of the projects have ``substantial cash flow exposure'' to either Pacific Gas and Electric Co. and Southern California Edison, which are units of San Francisco-based and Rosemead, Calif.-based Edison International .

Further downgrades could follow, Moody's said, ``if the near term liquidity crisis facing the utilities is not averted, and other corrective measures are not implemented.''

Moody's and another rating agency, Standard & Poor's, have since Thursday cut most of their ratings for the utilities and related entities to their lowest investment grades.

A third agency, Fitch, cut its ratings for the utilities deep into junk.

The utilities' credit ratings took big hits because the utilities operate under a rate freeze and can't pass on enough of their soaring wholesale power costs to consumers.

If either utility is cut by Moody's or S&P to junk, it would be in default of various of its bank loans. No similar provision affecting Fitch is in the loan agreements, people familiar with the matter said.

Moody's and other agencies have expressed disappointment with the California Public Utilities Commission's decision last Thursday to award the utilities a temporary 10 percent rate hike, less than have what the utilities have said they need to stay solvent.

http://www0.mercurycenter.com/breaking/docs/AA23165.htm

-- Martin Thompson (mthom1927@aol.com), January 08, 2001

Answers

The California PUC is well on its way to screwing this one up good.

-- JackW (jpayne@wbtv.net), January 08, 2001.

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