Entegrus Powerlines Inc.

The stable outlook reflects S&P Global Ratings' assessment of EPI's predictable and stable cash flows from a low-risk, regulated distribution business. In our base-case scenario, we expect adjusted FFO to debt of 14%-16%. The outlook also reflects our expectation that the company will continue to focus on its core regulated business during our two-year outlook horizon. We would downgrade the company if EPI sustained deterioration of its forecast FFO to debt of approaching 13%. This could happen following a material, adverse regulatory ruling, but is more likely to be the result of significantly higher leverage. We could raise the rating if we forecast EPI's adjusted FFO to debt will improve to greater than 21% consistently, all else being equal. Based

...The Ontario Energy Board (OEB) has established deferral accounts to record the costs and losses stemming from the COVID-19 pandemic. The OEB, Ontario's regulator, has acknowledged that utility distributors, including Entegrus Powerlines Inc. (EPI), may incur incremental costs related to the ongoing coronavirus pandemic. Therefore, it established deferral accounts for utilities to track incremental costs and lost revenue related to the pandemic. This will allow EPI to recover potential lost revenue, incremental expenses, or costs related to bad debt expenses, subject to the OEB's approval. The pandemic could increase EPI's cash flow volatility over the short term and lead to some regulatory lag, though the expected recovery of its COVID-19-related costs through the deferral accounts partly mitigates potential lost revenue. We expect EPI to effectively manage regulatory risk, supporting our assessment of its excellent business risk profile. This reflects EPI's essential electricity distribution...

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