How utilities pay for damage related to Hurricane Sandy can affect credit quality, according to Standard & Poor's.
Although affected utilities' solutions and costs from the aftermath of the Oct. 29, 2012, storm share common elements, the funding sources available reflect varying views among government officials about where the financial responsibility for funding these investments lies, S&P said in a May 20 report.
"We believe the means for funding and cost recovery can be important factors in determining our ratings," said S&P credit analyst David Bodek in a report titled "How Utilities Pay For Post-Sandy 'Storm-Hardening' Infrastructure Investments Could Factor Into Credit Quality."
Sandy knocked out electric service to 1.4 million of Consolidated Edison Inc.'s roughly 3.3 million New York City electric customers and about 920,000 of Long Island Power Authority's 1.1 million customers. Lights also went out for about 1.7 million of New Jersey's Public Service Electric & Gas Co.'s 2.2 million electric customers. For many, the outages lasted weeks, deeply affecting the region's economy.
