Howard County Maryland Blog

Local Politics and Current Events

Moody’s lowers BGE’s credit rating

Posted by David Keelan on Wednesday, July 12, 2006

Hmmmm.  Who would have thunk…

A friend of mine at BSG is thinking of leaving.  He says, with all this crap going on they see further pressures on the company’s financials and that BGE will be forced to cut heads. 

Question: If revenues are falling how do you keep up profits? 

Answer:  Cut expenses. 

Thank you Mr. Miller and Mr. Busch.
Downgrade is linked to rate relief

By Paul Adams
Sun reporter
July 12, 2006

Moody’s Investors Service downgraded the credit rating of Baltimore Gas and
Electric Co. yesterday in response to concerns about the Maryland legislature’s
recent actions to soften the blow of a 72 percent rate increase and fire the
state’s five-member utility commission.


8 Responses to “Moody’s lowers BGE’s credit rating”

  1. MC said

    Miller and Busch? If you read the article… it seems that even BGE was surprised that they were downgraded. Doesn’t sound like a Miller and Busch problem… sounds like a Moody problem… can’t be held hostage by an Investor’s Service, can we?

    “BGE officials were surprised by Moody’s decision, saying the legislation allows the utility to recover all of its borrowing costs associated with the rate phase-in plan. “Today’s downgrade represents an unfortunate overreaction that fails to recognize the essential cost recovery safeguards for BGE and Constellation Energy included in [the state Senate bill],” said Rob Gould, a spokesman for the utility.”

  2. hocomd said

    I would not expect any other kind of response from BGE or most any other company who’s credit rating is downgraded. I would not expect them to say, “Yeah, they are right. Charge us a higher interest rate for borrowing capital…”


    I certaintly don’t expect them to attack or blame the General Assembly either. They still have to do business with them and they can still interfere with the FPL merger.

    The article also said:

    This is the second time this year the major credit ratings agency has downgraded BGE’s debt in response to the political furor over rising electric rates. They also said it will increase rates.

  3. Mary Smith said

    A downgraded rating due to the firing of the PSC? This means that the writer believes Moody’s analysts view the PSC as a BGE group, rather that a Public Service Commission.

  4. Mary

    That (even as tongue in cheek) makes no sense

  5. Mary Smith said

    “Moody’s Investors Service downgraded the credit rating of Baltimore Gas and Electric Co. yesterday ” why? “.. in response to concerns about the Maryland legislature’s recent actions…” “and fire the state’s five-member utility commission.”

    You don’t see the connection? Ok, let me break it down further: Moody’s believes that firing the PSC has a negative impact on BGE earnings ability.

    I was a stockbroker in the 80’s but really, you give me far too much credit for analytical ability. It’s right there, staring a reader in the face.

  6. Mary,

    Ok. I see where you are coming from. You actually believe what you said.

    Moody’s is concerned about the General Assembly’s actions.
    I read the entire decision on Moody’s web site. They don’t imply they view that the PSC is part of BGE as you say. Suggesting so is a complete distortion.

    Moody’s only reference to the PSC is that with their firing and not knowing who the new board will be coupled with continued legal action is it creates uncertainty – which as a stock broker you know – makes the market nervous.

    The action on part of Moody’s is almost fully related to Senate Action which strains BGE’s cashflow and ability to cover current and future debts.

    I would paste the entire decision for your review but it is against their T&Cs. Logon and register (it is free) and you can read it yourself.

    I would be interested in what you think after you do so.

  7. hocomd said


    Just read a Washinton Times article. Gov. Ehrlich puts a lot of weight on the PSC issue in Moody’s decision – not your spin though. He says it is a major reason that Moody’s downgraded BGE.

    I don’t agree with the Guv either.

  8. Mary Smith said

    There is an interpretation that Moody’s views the PSC firing as detrimental to BGE the company. This prompts the next question regarding why a commission that was set up to serve the public would be so important to BGE at a time when the interest of the public conflicts with that of the company.

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