Credit rating agency Morningstar DBRS is offering commentary on whether or not Canada’s utilities can maintain credit strength as all eight publicly-owned electric utilities, including NL Hydro, plan record capital spending programs over the next decade.
Hydro Quebec leads the way among the public electrical utilities with more than $10 billion in capital spending planned from now until 2035. That includes increasing capacity by between 8,000 MW and 9,000 MW.
Meanwhile, NL Hydro’s approved regulated capital budget is approximately $136 million with a nonregulated capital program budget of $171 million for 2025.
Ontario Power Generation Inc’s capital program is expected to grow to about $5 to $7 billion a year.
Morningstar DBRS says while the overall trend for Canadian utilities remains stable, rising capital investment will tighten financial flexibility over the medium term, and leverage ratios could remain elevated through 2030.
The credit rating agency warns that rate regulated cost recovery and government ownership underpin steady credit quality, but potential cost overruns and construction delays could affect balance-sheet recovery beyond the current forecasts.
It says maintaining credit ratings will hinge on utilities’ ability to diversify funding and ensure that recovery mechanisms accommodate higher capital spending.
