Electricity reforms either "favourable" or "manageable", says S&P:

Friday 11th December 2009

Proposed electricity reforms are expected either to have "favourable" or "manageable" consequences for the four largest generator-retailers, for which Standard & Poor's assigns credit ratings.

The reform package announced by Energy Minister Gerry Brownlee on Wednesday "has no immediate effect on the credit quality of the four generator-retailers", S&P said in a statement today.

"In our view, the proposed changes are likely to have either favourable or manageable implications. If implemented (they) are not only significant for the sector's operating and competitive landscape, but also financially in the case of Genesis and Meridian," said lead S&P credit analyst Pravathy Iyer.

"Indeed, we believe the changes will likely result in all the rated entities re-evaluating their business and financial strategies. Although the companies have varying levels of headroom at each of the respective ratings, primarily due to differences in their growth appetite and financial risk profile, the credit quality of the rated entities will be largely driven by how they respond and adapt to the new operating landscape."

S&P would evaluate responses and factor them into the ratings for Contact Energy, Genesis Energy, Meridian Energy or MightyRiverPower, which remain unchanged for now.

Businesswire.co.nz

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