Fitch: Capex, Renewable Energy and Bank Liquidity Key to Utility, Power & Gas Sector Outlooks

NEW YORK--(Business Wire)--
This morning Fitch Ratings, in conjunction with the Edison Electric Institute's
(EEI) 2009 Financial Conference, held its 21st Annual Global Power Breakfast. At
the conference, Fitch analysts stated that against the backdrop of the recession
and credit crisis that affected the U.S. and global economy, the U.S. utility,
power and gas (UPG) sector held up very well with relatively few credit rating
changes in the sector for the year 2009 to date. Also of note, 88% of the
credits rated by Fitch are sustaining Stable Rating Outlooks. However, the
predominant direction of changes in ratings or Outlooks in 2009 has been
negative.

During the conference, Fitch said that looking ahead to 2010, its credit outlook
for the sector is shaped by the expectation of a moderate economic recovery.
Electric power demand is expected to turn around from the declines of late 2008
and 2009, but Fitch is expecting growth in demand to be slower than
historically, around 1% per annum. In addition, gas prices are expected to
reflect an overhang of supply for the next few years, with prices in the $4 to
$6 area.

In Fitch's view, capital spending budgets in the electric utility sector have
remained high despite well-publicized cuts in some companies' plans. For the
entire sector, budgeted capex remains high, in excess of 200% of depreciation
and amortization. In addition, the current bank liquidity situation should be
manageable and not have a widespread impact on ratings for the UPG sector. Fitch
says the UPG sector issuers have maintained relatively good loan and bond market
access during the credit crisis. Treasurers in this sector are considering many
alternatives to traditional bank credit, and each alternative strategy presents
some trade-offs.

Fitch expects rapid growth in renewable energy resources, driven by a
combination of tax incentives, renewable portfolio mandates, and growing signs
of political pressure to enact feed-in-tariffs. Planned renewable generation
coming on line is expected to have a more immediate impact upon the power sector
than the implementation of laws or regulations to limit carbon emissions.

Full slide presentations from the event are available on Fitch Ratings' web site
'www.fitchratings.com.' Fitch will publish its full 2010 outlook for the North
American power and gas industry later in November.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings, New York
Glen Grabelsky, +1-212-908-0577
Ellen Lapson, +1-212-908-0504
Media Relations:
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

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