Fitch: Electric Industry Re-regulation in Virginia has no Immediate Impact On Ratings.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of & CHICAGO -- Electricity legislation was passed by the Virginia House of Delegates The Virginia House of Delegates is the lower house of the Virginia General Assembly. It has 100 members elected for terms of two years; unlike most states, these elections take place during odd-numbered years. and the Virginia Senate on Feb. 6, 2007 to re-regulate the state's electricity industry and will next go to conference committee to reconcile differences. Fitch does not believe passage of the bills will result in any immediate rating actions. The return to more traditional electric regulation by the Virginia State Corporation Commission (SCC SCC - strongly connected component ) and retreat from retail competition would reduce uncertainty over the future market structure in Virginia. Over the long term, the new market structure could have modestly positive credit or ratings implications for Virginia Electric and Power Company (Issuer Default Rating [IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ]'BBB+') and Appalachian Power Company (IDR 'BBB'). In summary, if enacted essentially as in the two bills, the new law would advance the scheduled expiration of the capped rate period to Dec. 31, 2008 from Dec. 31, 2010, and establish a new methodology for determining electric rates for investor-owned electric utilities after the expiration or termination of capped rates. Utilities would also be able to obtain, during or after the capped rate period, rate adjustment clauses for various purposes, including demand-side management, conservation, renewable energy Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. , energy efficiency and load management programs, which shall be approved if the costs or the need for the incentives are demonstrated with reasonable certainty. Initiation of one or more of these clauses would stabilize cash flow and reduce regulatory recovery lag on investments in these areas. In addition, the proposed law would enable the SCC to provide necessary financial assurances to encourage utilities to make substantial, critical investments in Virginia base-load generation facilities. The actual return on equity (ROE) range would be established after expiration of the rate caps and cannot now be determined. To establish the ROE when Virginia utilities go through the actual ratemaking rate·mak·ing n. The practice of establishing rates of payment, as for public transportation or utilities. rate process, the SCC would choose nine utilities in the Southeast as a peer group for comparison. Earnings in excess of the ROE range would be shared with customers. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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