Saturday, November 8, 2014

Electric utility 'death spiral' in US is premature, Moody's says

Article Abstract:
Washington (Platts)--6Nov2014/342 pm EST/2042 GMT

The dramatic drop in renewable power costs and predictions for distributed generation growth can be disruptive to electric utilities, but projections for a so-called "death spiral" in the utility sector are premature, Moody's Investors Service said Thursday.

Action by utilities, state lawmakers and regulators to refine utility cost-recovery models to stay ahead of a potential industry transformation involving widespread adoption of DG lessens the threat of disruption, Moody's said.

"We don't see the utility structure being upset on the horizon ... [because] we believe utilities will continue to receive reasonable regulatory treatment," Moody's said in a report.

That regulatory treatment can include decoupling utility revenue from being totally dependent on electricity sales, approving standby charges to customers installing DG facilities, or allowing utility ownership of DG projects, Moody's noted. A proactive regulatory response is a positive development for utility credit ratings, it said.

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