CHICAGO, Oct. 5 /PRNewswire/ -- Standard & Poor's Rating Services today lowered ComEd's unsecured debt rating from 'BBB' to 'BB+' -- the equivalent to junk status -- citing the increasingly unstable political climate around a rate freeze extension.
This week, Illinois House Speaker Michael Madigan urged Governor Rod Blagojevich to call a special session that could enact legislation to freeze ComEd's rates for another three years. ComEd's current supply contracts expire at the end of this year. To supply power to its customers for 2007 and beyond, the company signed new purchase contracts after last month's auction. Based on these contracts, if a rate freeze is passed ComEd's costs are going to exceed its current revenue.
"If we are unable to recover our costs for doing business by increasing rates next year, the results would be financially disastrous for our customers, ComEd and the Illinois economy," said ComEd president, J. Barry Mitchell. "Today's credit downgrade affirms our concerns about the devastating impact of rate freeze extension legislation. We estimate our losses to be $1.4 billion or more in 2007, should such legislation be enacted."
Since late last year ratings agencies Standard & Poor, Moody's and Fitch all have downgraded ComEd's credit rating, citing a heightened adversarial political climate.
Commonwealth Edison Company (ComEd) is a unit of Chicago-based Exelon Corporation , one of the nation's largest electric utilities with approximately 5.2 million customers and more than $15 billion in annual revenues. ComEd provides service to approximately 3.7 million customers across Northern Illinois, or 70 percent of the state's population.
