...Solid Financial Profile: San Diego Gas & Electric Co.'s (SDG&E) credit metrics are strong, with FFO fixed-charge coverage and FFO-adjusted leverage of 8.1x and 3.1x, respectively, for the LTM ended March 31, 2017. Fitch Ratings projects FFO fixed-charge coverage to average 6.2x from 2017 to 2021 and FFO-adjusted leverage to average 3.2x, incorporating the five-year $6.2 billion capex program (excluding the $250 million recently requested for the Customer Information System replacement program) and increase in upstream dividend. Extension of Cost of Capital: SDG&E reached a settlement in February 2017 with two major intervenors that will extend the deadline for filing the next cost of capital (CoC) application by two years to April 2019. The agreement allows for a ROE of 10.2% (reduced from 10.3%) for 2018 and 2019, above the industry average of mid-9%. The settlement was approved on July 13, 2017. Supportive Regulatory Framework: California's utility regulations include a pre-approval of...
