DBRS Morningstar Confirms AltaLink, L.P. at 'A' With a Stable Trend.
ENPNewswire-July 21, 2021--DBRS Morningstar Confirms AltaLink, L.P. at 'A' With a Stable Trend
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Release date- 20072021 - DBRS Limited (DBRS Morningstar) confirmed AltaLink, L.P.'s (ALP or the Company) Issuer Rating and the rating of its Medium-Term Notes (Secured) at 'A' and the rating of its Commercial Paper at R-1 (low).
All trends are Stable. The ratings reflect ALP's low-risk regulated Transmission business in Alberta accounting for 100% of ALP's earnings and assets, a reasonable regulatory environment, and financial metrics achieved over 2020 and the first quarter of 2021 that are in line with the rating level.
DBRS Morningstar continues to view the Alberta regulatory regime as generally supportive of the current ratings. ALP's sole ratepayer is the Alberta Electric System Operator (AESO), the nonprofit corporation mandated to manage the province's electric network, and the Company has been to date largely insulated from end-market or economic risk brought on by the Coronavirus Disease (COVID-19) pandemic. The likelihood of an AESO default is low, and DBRS Morningstar notes that ALP was able to add a new $100 million credit facility in April 2020, during the height of the pandemic's uncertainty, both to support potential regulatory decisions and to provide a liquidity buffer.
ALP's focus over the past year has been on execution of its commitment to maintain tariffs at or below 2018 levels for five years to 2023 through a combination of cost control and regulatory actions. DBRS Morningstar notes that decisions by the Alberta Utilities Commission (AUC) have generally been supportive of this objective, including the AUC's April 2020 approval, in its entirety, of the negotiated settlement portion of ALP's 2019-2021 General Tariff Application (GTA); its eventual approval, in November 2020, of ALP's proposed salvage methodology; and its March 2021, approval of regulatory adjustments leading to $230 million in tariff refund for 2021, and, together with past regulatory decisions, representing more than a billion dollars in reduced tariff payments. DBRS Morningstar views these actions as indicative of the commission's continued support for reducing regulatory lag, particularly during pandemic uncertainty. DBRS Morningstar also views positively the AUC's willingness to extend 2021 Generic Cost of Capital (GCOC) parameters into 2022 in recognition of the ongoing economic uncertainty. However...
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