(The following statement was released by the rating agency)
Oct 4 - Since the late 1990s, most U.S. regulated electric utilities have grappled with renewable portfolio standards, regulations that require utilities to derive an increasing amount of energy from renewable sources. The report published by Standard & Poor's Ratings Services today discusses how these standards could affect the utilities. Many states are compelling investor-owned utilities to buy or build renewable energy, although each state's time to compliance, measurement of renewable output, and definition of renewable technology differs.
"While efforts to set national carbon standards have stalled, states appear to have taken the lead in establishing renewable standards," said Standard & Poor's credit analyst Michael Ferguson. Critics of carbon standards often cite the higher cost of deriving energy from renewable sources, especially when natural gas prices are low. Some are questioning the economics of funding renewable energy at a time when unemployment is high and the recovery is lackluster. In addition, most renewable projects, whether wind, solar, or hydro, depend heavily on weather patterns to perform and their reliability can vary significantly.
Electric utilities are attempting to find some middle ground, the report, "Credit FAQ: What Renewable Energy Standards Mean For U.S. Electric Utilities' Future," notes. They're complying with requirements, while trying to keep consumers' bills low and regulators and policymakers satisfied. Standard & Poor's credit FAQ looks at how electric utilities are integrating renewable standards into their supply portfolios, and how these changes may affect their credit quality.
(Caryn Trokie, New York Ratings Unit)