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SAN DIEGO G&E 'A+' FIRST MORTGAGE BONDS, 'A' PREFERRED AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Aug. 12 /PRNewswire/ -- San Diego Gas & Electric's $274 million 'A+' first mortgage bonds and $131 million "A" preferred and preference stock are affirmed. The credit trend is declining.
 The company's strong financial protection measures will be subject to increased financial stress due to growing capital requirements for new generation and lower allowed equity returns, but should remain at levels appropriate for the current ratings. Although purchased power dependence remains high at about 50 percent of total energy sources, firm purchases account for only about 33 percent and are expected to decline to 27 percent. In order to mitigate the increased imputed leverage of purchased power the company has maintained a strong common equity ratio, which it proposes to increase for regulatory purposes to 50.5 percent from 49.5 percent of total capitalization.
 As of March 31, 1993, consolidated capitalization was 50.7 percent total debt, 4.0 percent preferred stock, and 45.3 percent common equity. Pretax coverage, unadjusted for purchased power, for the 12 months ended March 31 was 4.33 times (x). A modest increase in debt leverage and a decline in pretax coverage is estimated during the period of increased construction activity over the next several years.
 Assuming traditional ratemaking for the company's growing construction program, internal cash generation is estimated to decline to less than 50 percent from an average of about 85 percent over the last five years. The company's five-year proposed capital expenditure program, totaling $2.1 billion, includes the repowering of the South Bay power plant, which would add 500 megawatts of generating capacity.
 The company has proposed two alternative performance-based ratemaking proposals for recovery of the South Bay investment. The company's objective is to supply power under price and performance conditions similar to those offered by non-utility suppliers. The proposal would eliminate reasonableness reviews, and put in place a mechanism that offers a risk and reward mechanism.
 -0- 8/12/93
 /CONTACT: Stephen Fedun of Fitch, 212-908-0568/
 (SDO)


CO: San Diego Gas & Electric ST: California IN: UTI SU: RTG

TS -- NY068 -- 2218 08/12/93 15:37 EDT
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Publication:PR Newswire
Date:Aug 12, 1993
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