AltaLink L.P.

The stable outlook on ALP reflects that on ultimate parent Berkshire Hathaway Energy Co. (BHE). The stable outlook on BHE over the next 24 months reflects our expectation that management will effectively integrate recently acquired gas storage and transmission businesses into BHE's midstream energy operation. At the same time, management will focus on its core utility operations and reach constructive regulatory outcomes supporting the business risk profile. In addition, we expect financial measures to initially weaken following the acquisition but modestly strengthen in 2021, supporting the rating. Under our base-case forecast, we expect adjusted FFO to debt of 14%-16% in 2021 and 2022. We could lower rating on ALP if we lower rating on BHE, which could happen if BHE's

...We expect AltaLink L.P. (ALP) to effectively manage regulatory risk, supporting our assessment of its excellent business risk profile. The Alberta Electric System Operator (AESO) authorizes ALP's capital spending and pays all its revenues in equal monthly installments. This provides stable and predictable operating cash flow and cost recovery, and it eliminates volumetric risk in electricity consumption. ALP previously effectively mitigated regulatory risk with a consistent track record of earning at least its authorized return on equity (ROE). We expect ALP's forecast credit metrics to remain comfortably within the range for the significant financial risk profile category. For ALP, our base-case scenario includes adjusted funds from operations (FFO) to debt of 11.5%-12.5%, at the upper end of the benchmark range for the assessment. We base our risk assessment on our low volatility financial ratio benchmarks, which are the most relaxed compared to those we use for the typical corporate...

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