DUFF & PHELPS RATES NEW YORK STATE ELECTRIC & GAS CORPORATION PREFERRED STOCK RATED 'BBB'
CHICAGO, Dec. 8 /PRNewswire/ -- Duff & Phelps Credit Rating Co. Has Assigned a rating of `BBB' (Triple-B) to New York State Electric & Gas Corporation's (NYSEG) offering of 1.8 million shares of adjustable rate serial preferred stock, Series B (cumulative, $25 par value). Proceeds will be used to refinance outstanding preferred stock. As expected, NYSEG's reported financial performance has gradually improved with rate increases and common equity offerings. Interest coverages are stable when adjusted for purchased power obligations. The sharp rise in high priced purchased power obligations in the 1993-94 time period will put upward pressure on rates and negatively affect the company's competitive position. Additionally, weak electric sales, as a result of the sluggish economy, will continue to moderate improvement. NYSEG's reserve margin will remain high in the near term, as the company is obligated to purchase considerable amounts of capacity from non-utility generators (NUGs). The cost of this capacity, as well as the cost of required demand side management programs, will increase the company's future revenue requirements. The company's efforts to reduce the rate impact of purchased capacity from NUGs include terminating contracts where feasible and petitioning the New York Public Service Commission (PSC) for approval to curtail NUG purchases. In September, the New York Public Service Commission adopted a three-year rate increase settlement with modifications. Return on equity (electric) will be set at 10.8 percent the first year and 11.4 percent the second and third years, with an incentive and penalty mechanism. New York State Electric & Gas Corporation provides electric and gas service in the central, eastern and western parts of upstate New York. -0- 12/8/93 /CONTACT: John C. Dell of Duff & Phelps Credit Rating Co., 312-368-3161/
CO: New York State Electric & Gas Corporation ST: New York IN: UTI SU: RTG
WB -- NY060 -- 1757 12/08/93 12:21 EST
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|Date:||Dec 8, 1993|
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