DUFF & PHELPS GIVES COMMONWEALTH ELECTRIC COMPANY INITIAL PUBLIC RATING OF 'BBB-'
CHICAGO, April 8 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has assigned an initial public rating of `BBB-' (Triple-B-Minus) to Commonwealth Electric Company's outstanding notes, which total approximately $160 million. Commonwealth Electric Company is primarily an electric distribution company providing retail service to customers in southeastern Massachusetts, Cape Cod and Martha's Vineyard. About 16 percent of the company's customers are seasonal. The company is regulated by the Massachusetts Department of Public Utilities (MDPU). Commonwealth Electric's last MDPU order in July 1991, authorized a $10.9 million (3.1 percent) revenue increase, reflecting a 12 percent return on common equity. Purchased power contracts with affiliate Canal Electric, Boston Edison, and non-utility generators, provide about 98 percent of the company's energy requirements. The high seasonal customer base and costly purchases from non-utility generators have lead to relatively high retail rates. Internal cash funded approximately 60 percent of the $90 million of construction expenditures in the 1990-92 period. Short-term debt financed the balance of capital expenditures. Forecasted construction expenditures of about $130 million for the period 1993-97 are expected to be two-thirds funded by internal cash generation. Factors important to continued growth in Commonwealth Electric's base revenues and maintenance of its debt protection measures include a return to normal weather and improvement in the local economy. Gradual improvement in coverages is expected from strengthening cash flows, a return to more normal sales levels and continued cost reduction efforts. Declining balance sheet leverage is also expected. Commonwealth Electric serves over 300,000 retail customers within its 1,105 square mile service territory. The company is one of several subsidiaries comprising Commonwealth Energy System. Measures being taken by the System as a whole to improve its competitive posture include controlling expense levels, changing rate design to attract and retain industrial customers, and implementing conservation and load management programs. -0- 4/8/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/ (CES)
CO: Commonwealth Electric Company ST: Massachusetts IN: UTI SU: RTG
SM -- NY053 -- 4288 04/08/93 13:53 EDT
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|Date:||Apr 8, 1993|
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