Newfoundland Power is maintaining a positive credit rating, but the biggest challenge it faces is rate shock once Muskrat Falls is fully commissioned.
That’s according to DBRS Morningstar. The credit rating agency has confirmed Newfoundland Power’s rating at “A” with stable trends.
DBRS says the regulated utility continues to benefit from multiple regulatory deferral accounts, reducing volatility in earnings and cash flows.
However, it says the biggest challenge facing Newfoundland Power is the potential rate shock for ratepayers from the Muskrat Falls project which is expected to be fully commissioned by next fall.
The credit rating agency says without rate mitigation, the impact of Muskrat Falls on rates could severely reduce electricity volumes and affordability for Newfoundland Power’s customers and negatively affect company earnings and cash flow.
DBRS Morningstar expects promised rate mitigation from the provincial government will help, but says weak oil prices and the ongoing pandemic have negatively affected already weak provincial economic conditions.
