...Strong Credit Metrics: Baltimore Gas and Electric Company's (BGE) credit metrics strengthened materially in 2015 and are strong for the current rating level. The improvement is due to electric and gas base rate increases effective December 2014, lower interest expenses and a modest rise in debt. Fitch Ratings expects credit metrics to weaken moderately in 2016 due to an expanded capex budget, but to remain strong for the rating level, including debt/EBITDAR and FFO lease-adjusted leverage of about 3.25x and 3.50x, respectively. Regulatory Recovery Mechanisms: Rate adjustment mechanisms outside of base rate cases tend to stabilize BGE's cash flow. These include decoupling for residential and commercial gas and electricity sales, and purchased gas and purchased power recovery mechanisms. In 2014, Maryland regulators approved a rider to recover gas infrastructure improvements and have approved three subsequent surcharges (2014, 2015 and 2016). Certain capex is also subject to tracking mechanisms,...
