HECO debt ratings lowered
Hawaiian Electric Co. and its subsidiaries, which recently have sought recent rate increases to help pay for equipment, maintenance and operating costs to meet growing demand, had their long-term credit and debt ratings lowered yesterday.
Standard & Poor's Ratings Services reduced the Hawaii utilities' long-term corporate credit and unsecured debt ratings yesterday to BBB from BBB+. S&P affirmed its short-term corporate credit rating of A-2 for Hawaiian Electric.
However, S&P said the outlook for HECO and its subsidiaries, Hawaii Electric Light Co. and Maui Electric Co., was "stable," and raised its outlook on HECO parent Hawaiian Electric Industries Inc. to "stable" from "negative." It also affirmed its ratings on the parent company.
The rating agency attributed the downgrade on the utilities to "financial pressure that continuous need for regulatory relief, driven by heightened capital expenditure requirements, is creating for the next few years," S&P analyst Barbara Eiseman said.
HEI spokeswoman Suzy Holl-inger said the company is "disappointed" that the utilities' ratings were downgraded.
"We hope that they'll improve as earnings turn aro-und," she said. "Although near -term earnings have been challenged, our long-term view is positive."
The parent company reported earlier this month that HECO's first-quarter net income was $453,000, down from $21 million in the year-earlier period. Operating revenue fell 5.7 percent to $446.8 million from $474 million.
S&P said the "stable" outlook on HECO and its subsidiaries "reflects expectations for supportive regulatory decisions in several pending rate cases and continued health in the Hawaii economy."
HECO, which serves about 292,000 customers on Oahu, filed an application with the state Public Utilities Commission in December for a 7.1 percent rate increase. The request is still awaiting interim approval.
HELCO, which serves about 74,000 customers on the Big Island, received approval in April for an interim 7.58 percent rate increase. The increase is still awaiting final approval.
MECO, which serves about 64,000 customers on Maui, Molokai and Lanai, is still awaiting interim approval on a 5.3 percent increase filed in February.