Operating a utility, whether it be electric, gas, or water, is one of the most capital-intensive businesses in the world. One of the primary mechanisms used by utilities to raise capital is the issuance of debt. But issuing debt does not come without risk, and in the United States, there are three primary credit-rating agencies (Standard and Poor’s (S&P), Fitch Ratings, and Moody’s) that are responsible for assessing a utility’s ability to service its debts. These agencies issue credit ratings, and in general, the better the utility’s credit rating, the lower the cost the utility must pay for issuing debt, reducing its cost of capital.
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