More concessions to customers mean further downgrading

Even though the new rates have been put in place and even though it's possible that legislation designed to roll back the hikes maybe avoided, Moody's said, last week's committee vote "is a further sign of continued political intervention in the utility regulatory process, and the regulatory environment is no longer supportive of an investment grade senior unsecured rating for ComEd,'' Moody's said.

... Moody's...didn't change its Baa2 rating on Com Ed's "secured" debt -- debt, that is, which is backed by assets just as a home mortgage or a car loan is.

But for unsecured debt, the rating agency did cut. It noted a vote last week in the Illinois Senate's Environmental and Energy Committee. The committee members voted to include ComEd in a proposed rate freeze.

"It is not certain that this bill will be enacted into law as a negotated outcome remains possible," said Moody's, noting that a negotiated compromise "could involve concessions by the company." It appears, Moody's said, that "any resolution (of the tussle with lawmakers) would likely produce financial ratios for ComEd that are weaker than previously expected."

The political pressure reflects major rate hikes that both ComEd and Downstate electricity provider Ameren put in place January 1, under terms of an earlier agreement in which both companies held rates flat for a decade.

The big hikes have generated consumer anger, and state politicians have been moving to address the issue.

Even though the new rates have been put in place and even though it's possible that legislation designed to roll back the hikes maybe avoided, Moody's said, last week's committee vote "is a further sign of continued political intervention in the utility regulatory process, and the regulatory environment is no longer supportive of an investment grade senior unsecured rating for ComEd,'' Moody's said.

ComEd, Moody's elaborated, "will likely need to offer additional concessions to certain customer classes in order to head off passage of rate freeze legislation."

Moody's said it is continuing to review for possible downgrade ComEd.