Moody’s whacks Ameren debt rating
Moody’s Investors Service on Wednesday cut its rating on Ameren Corp.’s long-term debt rating to Baa3 – a notch above junk, or speculative grade – citing the St. Louis company’s declining cash flow relative to its debt obligations. The ratings downgrade affects about $800 million of debt securities.
The cut also reflects that “ongoing cost pressures and the lack of timely regulatory recovery of some costs will prevent ratios from returning to historical levels over the near term,” Michael G. Haggarty, Moody’s vice president and senior credit officer, said in a statement (registration required).
Here’s what else Moody’s said:
Ameren has experienced higher operating and maintenance costs and increased capital spending requirements at both its utility and nonutility businesses. Limited rate relief, low returns, and the lack of automatic rate adjustment clauses has led to regulatory lag in recovering costs in recent years…. In addition, the combination of large capital expenditures and the company’s high dividend payout ratio has resulted in substantial negative free cash flow in 2007 and 2008, which is likely to continue over the next several years.
The ratings downgrade comes a day after administrative law judges at the Illinois Commerce Commission recommended a $163.5 million increase in gas and electric rates for Ameren’s Illinois utilities. AmerenUE, meanwhile, has also asked Missouri regulators for a $251 million electric-rate increase that will probably be decided in early 2009.
The Moody’s action continues a pattern of credit-rating cuts for Ameren. Standard & Poor’s cut Ameren’s long-term rating to BBB- (also a notch above junk) last April amid all of the turmoil over electric-rate shock in Illinois. In May, Moody’s cut AmerenUE’s ratings to junk.
While a cut to debt ratings — the equivalent of a credit score for corporate borrowers – isn’t welcome news on Chouteau Avenue, expect the company to cite the recent downgrade to bolster its case for a rate increase in Missouri.
I wonder how much Ameren had to pay to get that rating? Perfect excuse to give Missouri for a rate increase.
All I know is I make a good living and my electric bill is a huge drain on my budget now.
I don’t know what more I can do to cut back. I have lowered the hot water heater, sit in the dark at night with nothing on but the tv, unplugged all clocks, appliances that are not needed on a daily basis that use “vampire” electricity, only use the washer when I have full load and now rarely use my clothes dryer (yes you can dry clothes without one)
I guess candles, heating bath water on a wood stove and reading are in my future, I guess I can start watching re-runs of the Beverly Hillbillies to learn how to survive
I sincerely doubt Ameren or the PSC want Ameren’s credit rating cut. It makes it more expensive for them to do business. That doesn’t serve anyone in the state.
Well, they can spend $300 million on putting lines underground after they have spent money on tree trimming on the same lines. In one instance where I own a house they have left the design to a contractor who sub let the job. Does this sound reasnable? I have asked an Ameren engineer and he referred me to the contactor for design and construction questions. Do you think they are doing it in the best cost effective method? In this instance the area is very rocky and we have excellent service, so I doubt the reasoning for the project. Maybe it is good press, but is it the best way for them to spend the money. Anyway just an engineer’s opinion.
This is interesting, by most accounts we have enjoyed some of the lowest rates in the country and have avoided (at least in Missouri) the de-regulation swamp. Now Ameren seems to be slipping because they delivered. If one of the larger energy companies thinks this is fertile ground and scoups Ameren up because the price per share is attractive, watch out, I don’t think they will have the same local perspective.
I don’t like the rate increases either, but I also follow the developments in the energy industry, it could be a lot worse.
The Missouri Public Service Commission and the Office of the Public Counsel are accepting comments regarding AmerenUE filing for $250 million in increased revenue. Please send your comments to opcservice@ded.mo.gov and pscinfo@psc.mo.gov.
Ameren Corporation should clean house at its Executive level. Apparently management thinks its entitled to all kinds of perks including luxury boxes at all kinds of sporting events. They should stop lavish spending trying to convinced bilked ratepayers that they give a damn about reliability. POWER ON is nothing but window dressing trying to cover their sins of the past where line maintenance and tree trimming are concerned. Name on of their so=called “Executives” ran a business that didt fail or wasnt failing when they departed. Additionally they could save a fortune if they stopped trying to bribe every polititcian in the state of Illinois!!!! Ameren’s Management needs to get it’s collective head out of its butt instead of rewarding themselves with ridiculous base and bonus compensation. Ameren is playing nothing more than a shell game of profits while they plunder us in Illinois due to bad legislation in 1997. Legisalation Ameren lobbied very hard for!!!!!!! Time to clean house in Ameren’s Management!!! Overpaid and under achieving.