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Certain utilities selected to vie for T&D in Puerto Rico considered high risk

By on January 18, 2019

SAN JUAN – Some of the utility companies that are vying to lease the Puerto Rico Electric Power Authority’s transmission and distribution system were assessed as having a high-risk business profile by Moody’s Investors Services.

According to Utility Dive, the Moody’s report, which was made public in November, said that while most North American investor-owned utility holding companies are rated Baa, it concluded Exelon and Public Service Enterprise Group (PSEG) have the highest levels of operating risk due to their generation assets in competitive markets.

The executive director for the Puerto Rico Public Private Partnerships (P3 Authority), Omar J. Marrero, announced Thursday the selection of four proponents to manage and operate “all aspects” of the electricity transmission and distribution (T&D) system of the Puerto Rico Electric Power Authority (Prepa).

The qualifying proponents, from the five statements of qualifications received after the request for qualifications was opened Oct. 31., are Duke Energy Corp., Exelon Corp., PSEG Services Corp. and a consortium composed of ATCO Ltd, IEM and Quanta Services Inc. (collectively, the Quanta Consortium).

The P3 Authority’s press release described Duke Energy as a company that serves approximately 7.6 million customers in six states and has a T&D “system that extends more than 295,000 miles.” Exelon “is a Fortune 100 listed company. In 2017 Exelon served more than 10 million customers and generated revenues of approximately $33.5 billion. PSEG Services Corporation is a company that provides services to around 3.8 million customers covering approximately 2,600 square miles of territory.”

The P3 Authority also said Quanta Consortium’s companies have “broad experience,” with Quanta Services serving as a “provider of infrastructure solutions for the electric power, oil and gas, and telecommunications industries in North America.:

Moody’s, however, identified Exelon and Public Service Enterprise Group as having the highest business risk profiles of 34 large holding companies examined because of their substantial exposure to merchant generation, according to Utility Dive.

The credit rating company, Utility Dive noted, said Exelon’s credit profile is constrained by its higher-risk merchant power subsidiary, Exelon Generation Co., which owns unregulated nuclear generation facilities and a retail energy trading and marketing business.

Prepa and the P3 Authority were sent requests for comment.

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