MOODY'S DOWNGRADES O&R BOND RATING, 2 OTHERS PUT IT ON WATCH; PSC ACTION CITED
MOODY'S DOWNGRADES O&R BOND RATING, 2 OTHERS PUT IT ON WATCH;
PSC ACTION CITED
PEARL RIVER, N.Y., Dec. 13 /PRNewswire/ -- Three major bond rating agencies today took action concerning Orange and Rockland Utilities, Inc. (NYSE: ORU) securities.
The action stems from the New York Public Service Commission decision, rendered orally on Wednesday, Dec. 11, regarding the company's allowed return on common equity, according to the agencies.
Moody's Investor Service downgraded the utility's rating from A1 to A2.
And the rating agencies of Duff & Phelps, Inc., and Fitch Investors Service, Inc., both placed the utility's securities on their rating watches -- unfavorable.
Duff & Phelps, which currently rates the company's first mortgage bonds at AA-, stated that the action was taken pending an assessment of how large a downgrading in ratings is merited.
In response to the rating agencies actions, O&R Senior Vice President and Chief Financial Officer Patrick J. Chambers, Jr., said, "These actions are obviously a direct response to a discussion held at a public meeting of the New York Public Service commission two days ago. We are currently awaiting the written order from the commission so that we can evaluate precisely the overall decision by the commission and the rationale for their vote."
"The 10.3 percent return on equity verbalized at the commission hearing is in stark contrast to the company's original request for 13.75 percent," Chambers said.
As a general rule, the formula used by the NYPSC to determine this return on equity operates in a manner that penalizes companies whose performance is recognized by the public in the higher value the public places on the price of the company's common stock.
/CONTACT: Michael Donovan of Orange and Rockland Utilities, 914-577-2430/
(ORU) CO: Orange and Rockland Utilities, Inc. ST: New York IN: UTI SU: RTG
KD -- NY071 -- 2588 12/13/91 18:15 EST