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DUFF & PHELPS LOWERS DEBT RATINGS ON PROVIDENCE GAS COMPANY

     DUFF & PHELPS LOWERS DEBT RATINGS ON PROVIDENCE GAS COMPANY
    CHICAGO, March 4 /PRNewswire/ -- Duff & Phelps Credit Rating Co. today lowered the rating on Providence Gas Company's senior debentures from "A" (Single-A) to "A-" (Single-A-Minus).  Approximately $8 million in debt is affected.
    A string of warm winters and a weak economy have combined to pressure Providence Gas Company's earnings and coverages.  Additionally, leverage is high with fixed obligations accounting for over 60 percent of total capitalization.  A depressed Rhode Island economy has slowed customer additions and increased uncollectibles.  Although earnings sensitivity to weather was somewhat reduced in the last rate case with a shifting of cost recovery to a monthly customer charge, revenues can still fluctuate dramatically with weather.  With Providence's large proportion of customers who use natural gas for heating and its relatively small size, some type of mechanism to lessen revenue fluctuations due to weather would be a positive credit enhancement.
    Management's recent actions to conserve cash and reduce expenses are encouraging.  These steps include a dividend cut at Providence Energy, Providence Gas Company's parent, a concerted effort to reduce operating expenses, and a workforce reduction encompassing both non-union and union employees.
    The current rating assumes a return to more appropriate financial protection measures with a recovering economy and normal weather.  If such improvement is not forthcoming, then the rating would have to be reviewed for a possible further downgrade.
    -0-                        3/4/92
    /CONTACT:  David W. Eisinger of Duff & Phelps, 312-368-3145/ CO:  Providence Gas Company ST:  Rhode Island IN:  UTI SU:  RTG SM -- NY053 -- 4931 03/04/92 11:42 EST
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Publication:PR Newswire
Date:Mar 4, 1992
Words:263
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