Moody's May Turn More Negative On US Nuclear-Power Development
25 Juni 2009 - 3:51PM
Dow Jones News
Moody's Investors Service said Thursday it may take a more
negative view of power companies looking to build new nuclear-power
plants.
The credit-ratings firm in a report said companies developing
new reactors haven't taken steps to strengthen their balance sheets
ahead of the massive projects. Although federal loan guarantees
will provide low-cost financing, they only "modestly" reduce the
risk plant developers face.
"It has become increasingly likely that the pursuit of new
nuclear power projects will lead to some near-term rating actions
or outlook changes," Moody's said.
Several U.S. power companies are pursuing nuclear projects for
the first time in two decades. But the plants are expected to take
years to build, and cost estimates range from $5 billion to $12
billion. They also are relying on favorable state regulations,
which Moody's warns that while positive now, could change over the
lengthy construction period.
NRG Energy Inc. (NRG), Scana Corp. (SCG), Southern Co. (SO) and
UniStar Nuclear Energy, a partnership that includes Constellation
Energy Group Inc. (CEG) and Electricite de France SA (EDF.FR), are
developing the leading projects. Duke Energy Corp. (DUK), Progress
Energy Inc. (PGN) and PPL Corp. (PPL) will likely make up the next
wave, Moody's said.
Because new nuclear construction will increase the business and
operating risk of power companies, they will need to take steps to
preserve their ratings. Possible moves include partnerships,
increased reliance on equity as part of financing plans and
moderating their dividend policies to retain cash flow.
A Moody's analysis of the last build-out of nuclear generation
in the U.S. found 40 out of 48 companies that developed plants were
downgraded, with the average cut being four notches.
-By Mark Peters, Dow Jones Newswires; 212-416-2457;
mark.peters@dowjones.com