(The following statement was released by the rating agency)
Oct 02 - Standard & Poor's Ratings Services today assigned its 'A' preliminary debt rating
to Chubu Electric Power Co. Inc.'s (A/Negative/A-1) JPY500 billion domestic bond shelf
registration, effective for two years until Oct. 1, 2014.
Chubu Electric is the third-largest power company in Japan in terms of
electricity sales, providing about 15% of the nation's total electricity. The
ratings on Chubu Electric reflect its strong business and customer base. The
company has a monopolistic position in its supply area. It runs power
generation, electricity transmission and distribution, and retail operations
in a vertically integrated business model in the Chubu region. Its transparent
pricing mechanism also supports its credit quality, in our view. However, as
operator of the Hamaoka nuclear power plant, Chubu Electric continues to face
increasing operational and financial risks due to the disaster at Tokyo
Electric Power Co. Inc.'s (TEPCO; B+/Negative/B) Fukushima No. 1 nuclear power
plant. We have incorporated our view that pressure on the ratings on Chubu
Electric will continue because of a potential review of the existing favorable
regulatory framework and worsening measures of financial performance.
The ratings on Chubu Electric reflect our opinion that there is a "moderate"
likelihood of the government providing the company with timely and sufficient
extraordinary support if it were to experience financial distress.
RELATED CRITERIA AND RESEARCH
General Criteria: Rating Government-Related Entities: Methodology And
Assumptions, Dec. 9, 2010
2008 Corporate Criteria: Analytical Methodology, April 15, 2008