Proposed merger with Progress Energy Inc. (BBB+/Watch-Positive/A-2) would bolster the business risk profile. Regulated electric and gas operations account for over three-quarters of the credit profile, which would increase after the proposed merger, Regulatory risk is managed relatively well, aided in part by jurisdictions with credit-supportive regulatory environments, Service territories are large and diverse, with largely attractive markets, regulatory environments, and growth prospects, and A large and efficient regulated power generation fleet, with well-managed nuclear and coal plants, some fuel diversity, and competitive rates. Significant capital spending to address environmental and growth needs will pressure the financial profile and necessitate complete and timely recovery of expenses to support credit quality, Unsettled regulatory issues in Indiana and Ohio that will dampen
