...Solid Financial Profile: San Diego Gas & Electric Company's (SDG&E) credit metrics are strong, with FFO fixed-charge coverage and FFO-adjusted leverage of 6.5x and 3.1x, respectively, for the LTM ended March 31, 2016. Fitch Ratings projects FFO fixed-charge coverage to average 6.3x from 2016 to 2020 and FFO-adjusted leverage to average 3.3x, incorporating the significant capital investment program and increase in upstream dividend. Supportive Regulatory Framework: California's utility regulations include pre-approval of capital investments, bifurcation of general rate case (GRC) and cost-of-capital (CoC) proceedings, forward test years, revenue decoupling, and use of balancing accounts to manage cost fluctuations and reduce regulatory lag. Approximately 40% of SDG&E's rate base is regulated by the Federal Energy Regulatory Commission (FERC). Fitch views FERC regulation favorably, despite expecting allowed returns on equity (ROEs) to continue to decline. General Rate Case Approved: In June...
