“The outlook revision reflects our view of the heightened potential for future costs, liabilities, and potential litigation that these utilities face in light of the recent Los Angeles County wildfires,” S&P Glo
Bloomberg News
Two power utilities in Los Angeles County received negative rating outlooks because the fallout from the region’s January wildfires continues.
S&P Global Rankings Tuesday lowered to negative from stable the outlooks for Pasadena Water & Power’s AA-rated electric revenue bonds and Glendale Water & Power’s A-plus-rated electric revenue bonds.
“The outlook revision reflects our view of the heightened potential for future costs, liabilities, and potential litigation that these utilities face in light of the recent Los Angeles County wildfires,” S&P analyst Stephanie Linnet said.
The outlook revision affects $191 million in outstanding long-term debt issued by Pasadena Water & Power and $312 million in long-term debt issued by Glendale Water & Power.
Along with electric system direct debt, the Pasadena utility is chargeable for $68.7 million of off-balance sheet debt attributable to its share of joint projects developed by Intermountain Power Agency and Southern California Public Power Authority. Glendale Water & Power is chargeable for $265.4 million of off-balance-sheet debt attributable to its share of joint projects developed by IPA and SCPPA.
“These wildfires indicate the potential for increasingly frequent and highly destructive wildfires within the more urban areas of California,” Linnet said.
The outlook “reflects our view that there’s not less than a one-in-three probability that we could lower the rankings by a number of notches in the course of the outlook period, which generally spans two years,” Linnet said.
The Pasadena utility serves greater than 66,000 residential and business electricity customers in the town of 133,000. The majority of the 9,400 structures destroyed within the Eaton fire were within the neighboring unincorporated community of Altadena, but the hearth destroyed homes within the Pasadena city limits, in line with a damage map published by the county.
Neighboring Glendale’s 187,000 residents were largely spared from the January firestorm, though some neighborhoods were evacuated at the height of the Eaton Fire.