Pasadena, Glendale electric bonds get negative outlooks after wildfires

Two power utilities in Los Angeles County received negative rating outlooks as the fallout from the region's January wildfires continues.

S&P Global Ratings Tuesday lowered to negative from stable the outlooks for Pasadena Water & Power's AA-rated electric revenue bonds and Glendale Water & Power's A-plus-rated electric revenue bonds.

"The outlook revision reflects our view of the heightened potential for future costs, liabilities, and potential litigation that these utilities face in light of the recent Los Angeles County wildfires," S&P analyst Stephanie Linnet said.
The outlook revision affects $191 million in outstanding long-term debt issued by Pasadena Water & Power and $312 million in long-term debt issued by Glendale Water & Power.

In addition to electric system direct debt, the Pasadena utility is responsible for $68.7 million of off-balance sheet debt attributable to its share of joint projects developed by Intermountain Power Agency and Southern California Public Power Authority. Glendale Water & Power is responsible for $265.4 million of off-balance-sheet debt attributable to its share of joint projects developed by IPA and SCPPA.

"These wildfires indicate the potential for increasingly frequent and highly destructive wildfires in the more urban areas of California," Linnet said.

The outlook "reflects our view that there is at least a one-in-three chance that we could lower the ratings by one or more notches during the outlook period, which typically spans two years," Linnet said.

The Pasadena utility serves more than 66,000 residential and business electricity customers in the city of 133,000. The bulk of the 9,400 structures destroyed in the Eaton fire were in the neighboring unincorporated community of Altadena, but the fire destroyed homes in the Pasadena city limits, according to a damage map published by the county.

Neighboring Glendale's 187,000 residents were largely spared from the January firestorm, though some neighborhoods were evacuated at the peak of the Eaton Fire.