...Cost Pressure and Rates: In this report, Fitch Ratings analyzes the potential impact of a meaningful reversal to three key cost components for electric utilities: natural gas prices, interest rates, and operating and maintenance (O&M). In its analysis, Fitch considers the impact of a $1, $2 and $3 per million British thermal units (mmbtu) increase in the price of natural gas for a sample of 25 large electric utilities' retail rates assuming full cost recovery. Fitch also considers the impact of a rise in interest rates and O&M expense on retail rates. Higher Revenue Requirement: Results imply pro forma revenue requirement of 4.7%¡10.3% for the sample group to fully recover the combined stress increases in natural gas, interest rate, and O&M costs across the three scenarios. Natural gas represents 2.4%¡7.5% of the increased revenue requirement, reflecting growing use of natural gas in power generation. Interest rate increases push cost recovery in retail customer rates 1.3%¡1.5% higher,...
