Moody's Lowers Outlook for California Utilities Amid Worries About Power Market

NEW YORK -- Moody's Investors Service Thursday lowered its rating outlook on Pacific Gas and Electric Co., Edison International and Southern California Edison, citing the unprecedented spike in electric prices during the past three months as well as the unsettled state of electric deregulation in California.

Moody's lowered its outlook on all three companies to negative. SoCal Edison's outlook had been positive, while the outlook for the other two had been stable. Moody's placed the commercial paper and the extendible commercial notes of PG&E and Edison International, which is SoCal Edison's parent, under review for possible downgrade. The rating agency also noted that PG&E and Edison International will be carrying materially higher levels of short-term debt for at least two years with some uncertainty about the mechanism and the timeframe for recovery.

The ability of the companies to mitigate their exposure to the current high prices may be somewhat limited, Moody's said. 'Moreover, the price of electricity is beginning to show signs of being somewhat inelastic to changes in market conditions in California, causing prices to remain high.'

Headquartered in San Francisco, PG&E Corp. is the parent holding company of Pacific Gas and Electric, which distributes electricity and natural gas and provides transmission services throughout most of Northern and Central California.

Headquartered in Rosemead, Edison International (EIX), is the holding company for SoCal Edison as well as a number of nonutility businesses. SoCal Edison is one of the largest electric utilities in the U.S., and the largest subsidiary of Edison International.

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-- Martin Thompson (mthom1927@aol.com), September 14, 2000

Answers

Great. This is all we need, on top of greatly increased utility prices, extra, factored in, increased borrowing costs.

-- JackW (jpayne@webtv.net), September 14, 2000.