ATLANTA — Fitch Ratings has revised the rating outlooks of the parent company of Mississippi Power, Southern Company (Southern; Fitch Issuer Default Rating [IDR] of ‘A’), and its subsidiary, Georgia Power Company (GPC; IDR of ‘A’) to “stable” from “negative.” In addition, the ratings of both issuers are affirmed.
Fitch said: “The revision of Southern’s outlook to ‘stable’ reflects the strength and diversity of cash flows and consistent upstream dividend payments from the four regulated utilities and wholesale power business. The supportive rate settlement at GPC, which provides more than 40 percent of Southern’s consolidated EBITDA and significant dividends to the parent, helps stabilize the credit profile of Southern. The outcome of the GPC rate settlement was better than Fitch had previously forecast and provides an immediate boost to the forecasted credit metrics in 2011 and 2012.
“The rating outlooks of all Southern subsidiaries are now ‘stable.’
“Significant delays or cost overruns in either of the two major baseload construction projects – Vogtle and the Mississippi Power Company’s (MPC; Fitch IDR of ‘A’) Kemper IGCC plant could put pressure on the credit ratings or rating outlooks of Southern and subsidiaries and remain the most significant credit risks facing the company in Fitch’s view.
“Rating concerns for Southern include the construction risk associated with two baseload projects, abating but still present economic weakness, and increasingly stringent environmental rules on coal-fired plants that weigh on Southern’s utilities because of the predominance of coal in their generation mix.”