Moody's analyzes investor-owned electric utilities

Moody's Investor Service on Monday released a report that said the U.S. investor-owned electric utility sector remains stable with solid credit metrics and a supportive regulatory environment.

Larry Hess, a co-author of the report, said the sector still faces risks, including a potentially weakened long-term credit profile, an aging infrastructure in need of renovation, an aging labor force with a growing pension burden and potential new carbon emission legislation.

The report also notes an exodus of financial institutions from commodity markets, a risk to the sector as contracts expire during a season of higher capital costs and hedging activity becomes more challenging.

"These issues might have a significant impact on overall credit quality for the sector _ especially if they materialize more quickly than expected," said Jim Hempstead, a senior vice president and co-author of the report.

Moody's recommended "a balanced mix of debt, preferred stock and common equity."

Hempstead added that these are issues the industry is accustomed to and is able to manage.

"We foresee little long-term risk from mismanagement of the increasing social mandates that exist between utilities and their constituents, including customers, employees, investors, lenders, regulators and legislators," he said.

Shares of investor-owned electric utilities were mixed on Monday. Shares of Alliant Energy Corp. rose 49 cents to $28.52. Dynegy Inc. shares fell 28 cents, or 11 percent, to $2.34. Duke Energy shares rose 10 cents to $15.37.