New York State Public Service Commission Authorizes National Grid to Issue Up to $2.3 Billion in Debt Securities

Strategic Insights -

The New York State Public Service Commission has authorized National Grid, doing business as Niagara Mohawk Power Corporation, to issue up to $2.3 billion in new long-term debt securities. This decision comes after the company filed a petition in April 2021, requesting authority to issue up to $3.0 billion in debt for traditional utility purposes. The commission found a sufficient basis for the company's request, citing a historical reimbursement margin of $2.41 billion and a pro forma reimbursement margin of $6.25 billion through June 30, 2024.

Key Takeaways:

  • The Public Service Commission has authorized National Grid to issue up to $2.3 billion in new long-term debt securities for traditional utility purposes.
  • The company will use the debt to fund construction of utility plant, refinance maturing and/or redeemed issues of debt, redeem preferred stock, and meet other general corporate purposes.
  • National Grid has a historical reimbursement margin of $2.41 billion and a pro forma reimbursement margin of $6.25 billion through June 30, 2024.
  • The commission found that the company has a sufficient basis for its $2.3 billion request, citing the reimbursement margins and the company's financial condition.
  • National Grid is currently rated "BBB+" with a "Stable Outlook" by Standard & Poor's and "A3" with a "Negative Outlook" by Moody's.
  • The company's consolidated balance sheet and income statement for the year ending December 31, 2020, indicate that the Company's 2020 year-end common equity ratio was approximately 50.0% and that the Company earned a combined ROE of approximately 8.15% for that year.

Statistics:

  • $2.3 billion: The maximum amount of new debt securities authorized for National Grid.
  • $3.0 billion: The original amount requested by National Grid for traditional utility purposes.
  • $2.41 billion: The historical reimbursement margin of National Grid as of December 31, 2020.
  • $6.25 billion: The pro forma reimbursement margin of National Grid through June 30, 2024.
  • 50.0%: The common equity ratio of National Grid as of December 31, 2020.
  • 8.15%: The combined ROE of National Grid for the year ending December 31, 2020.

Sources:

  • STATE OF NEW YORK PUBLIC SERVICE COMMISSION, Order Authorizing Issuance of Securities, CASE 21-M-0194 (September 13, 2021)
  • Niagara Mohawk Power Corporation, Credit Opinion, Moody's Investors Service, October 23, 2020
  • Standard & Poor's Global Ratings, "National Grid North America Inc. Downgraded to 'BBB+' Following Downgrade of Parent," Research Update, March 3, 2021
  • Niagara Mohawk Power Corporation, Petition for Authority to Issue Securities, CASE 21-M-0194 (April 1, 2021)