S&P maintains Elenia Verkko Oyj’s issue rating at BBB+ (stable)
S&P Global Ratings (“S&P”) published its rating report on Elenia Verkko Oyj maintaining the BBB+ issue rating with stable outlook. The stable outlook signifies stable earnings and credit metrics.
Elenia’s strong credit rating is underpinned by the stable and predictable Finnish regulatory framework. However, the ongoing process to amend the Electricity Market Act (“EMA”) and especially the potential subsequent changes to the existing confirmed regulatory methods for the current regulatory period could reduce the predictability and stability of the Finnish regulatory framework and have considerable negative impact on the investments of Elenia and other distribution system operators.
S&P comments that it is highly unusual for the regulatory framework to be amended in the middle of the regulatory period. Elenia shares this assessment and views that changes to the previously confirmed regulatory methods may weaken the credibility of the Energy Authority (“EA”) as an independent regulator.
Elenia expects the EMA amendment to be approved in the Parliament in June. The EA is presumed to make changes to the existing confirmed regulatory methods when the amended EMA has entered into force so that the changes would be in full effect in the beginning of 2022. The changes are expected to include mainly an update to the unit prices underlying the regulatory asset base, an update to the determination of the reasonable rate of return causing it to decline to approximately 4 per cent and the removal of the security of supply incentive.
The rating report can be found at www.elenia.fi/en/investors/credit-ratings