At least one agency has boosted Constellation Energy Group?s credit rating in light of a recent court ruling that reinstated members of the Public Service Commission.
But another agency disagreed Monday, saying the court ruling would not change its downgrade of Constellation.
The Maryland Court of Appeals ruled on Sept. 14 that the Maryland General Assembly could not remove members of the Maryland Public Service Commission as it attempted to do through legislation.
It’s unclear whether the ruling would affect a planned $10.8 billion merger between Baltimore-based Constellation Energy and Florida-based FPL Group.
Ari Kagan, an analyst with Fitch Ratings in New York, said the ruling would not affect Fitch?s April downgrade off Constellation to BBB+ from AAA.
“It is still very possible that the legislature could put a lot of pressure on regulators when they are considering the merger later this year,” Kagan said.
“And it is certainly possible that there is another effort to alter the PSC. There is a lot of uncertainty. I don’t think we’re going to change our rating outlook based on the one court ruling,” Kagan said.
Constellation and FPL need approval from the Public Service Commission to proceed with the merger.
The furor over the commission and Constellation Energy was tied to a planned 72 percent utility rate increase charged by Baltimore Gas & Electric, a subsidiary of Constellation Energy.
The General Assembly rejected a planned phase-in period for the rate increase and passed legislation requiring current members of the Public Service Commission to vacate their commission seats, but the Sept. 14 court decision overturned the legislation.
Based on the court ruling, Standard & Poor?s Ratings Service on Friday announced it was raising its corporate credit ratings on Constellation Energy to “positive” from “developing.” The agency also raised its “CreditWatch” rating of Constellation’s unsecured debt to BBB+ from BBB.
“The revision is not based on our expectation of a successful merger with the FPL Group; however, if consummated, this merger could result in higher ratings, thus the positive CreditWatch,” wrote Aneesh Prabhu, a credit analyst with Standard & Poor?s.
