DUFF & PHELPS: COMMONWEALTH EDISON COMPANY $220 MILLION FIRST MORTGAGE BONDS RATED 'BBB'
CHICAGO, April 21 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned a rating of `BBB' (Triple-B) to Commonwealth Edison Company's (NYSE: CWE) offering for $220 million of 7 5/8 percent first mortgage bonds, due April 15, 2013. Proceeds will be used for refinancing higher cost debt. In response to regulatory and legal setbacks, Commonwealth Edison has undertaken major cost-cutting programs, significantly reduced planned construction, and decreased its common dividend. A January 1993 rate order from the Illinois Commerce Commission (ICC), if upheld, will result in rate reductions in excess of $330 million and require refunds of about $600 million plus interest. Commonwealth Edison is expected to file a second request for rehearing even though the first request was denied. This is due to the revision the ICC added subsequent to its original ruling. The addition established the minimum guideline for financial integrity as maintenance of an investment-grade bond rating. Additionally, Commonwealth Edison's coal purchase contracts are being scrutinized. The ICC staff has alleged that during the 1985 through 1988 period, customers were overcharged due to high-priced coal contracts, and has recommended refunds of $280 million. This issue may not be resolved for some time. Rate reductions, refunds and write-offs from adverse decisions could potentially deplete retained earnings. The Duff & Phelps ratings currently reflect the higher risk to the preferred stock but assume that any write-offs will not be so large that dividends cannot be maintained. Commonwealth Edison supplies electricity to approximately 70 percent of the population in Illinois. Its service territory extends across the northern fifth of the state, including Chicago. -0- 4/21/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/ (CWE)
CO: Commonwealth Edison Company ST: Illinois IN: UTI SU: RTG
TM -- NY119 -- 9021 04/21/93 17:32 EDT
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|Date:||Apr 21, 1993|
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