Ratings agency Fitch confirmed debt ratings for Delmarva Power, but downgraded sister company Potomac Electric.
Both Delmarva, which has operating headquarters south of Newark and Washington,D.C.-based Potomac are part of Pepco Holdings, which also saw its debt rating downgraded.
Two of the three utilities owned by Pepco, the other is Atlantic City Electric, have pending rate increase cases before regulators. Pepco has been making major capital investments in its electric systems in an effort to improve reliability.
Fitch sees low business risk at Delmarva, due to predictable cash flows from gas and electric service and a “relatively constructive regulatory environment.” Two-thirds of Delmarva’s customers are in Delaware, with the remainder in Maryland.Potomac struggled with a previous rate increase request before Maryland regulators.
The utility does plan to spend $1.6 billion between now and 2017 to upgrade its electrical system. That figure is beginning to draw some skepticism on whether the cost of improving reliability can be justified.
Critics have also questioned the accounting of costs for the company’s smart meter system and state mandates for use of alternative fuels, such as generation from Bloom energy fuel cells. Bloom cells have been installed at Delmarva substations and a Bloom plant in Newark is now manufacturing those units for use in Delaware. (See story in this edition).
