Research Update: DPL Inc. And Dayton Power&Light Downgraded To 'BB' On Weaker Financial Measures; Outlooks Negative

In December, DPL Inc.'s subsidiary Dayton Power&Light Co. (d/b/a AES Ohio) received a rate case order from the Public Utilities Commission of Ohio (PUCO) that authorized it to increase its base distribution rates by about $75 million. However, the rate increase will not go into effect until the company has a new electric security plan (ESP 4) in place, which we do not anticipate happening before mid-2023. Though we view the rate order as generally supportive of credit quality, we still project DPL's funds from operations (FFO) to debt to remain below our prior downgrade threshold of 8%. The company's weak financial measures reflect regulatory lag, the eventual discontinuance of the company's Rate Stabilization Charge (RSC), and a

...- In December, DPL Inc.'s subsidiary Dayton Power & Light Co. (d/b/a AES Ohio) received a rate case order from the Public Utilities Commission of Ohio (PUCO) that authorized it to increase its base distribution rates by about $75 million. However, the rate increase will not go into effect until the company has a new electric security plan (ESP 4) in place, which we do not anticipate happening before mid-2023. - Though we view the rate order as generally supportive of credit quality, we still project DPL's funds from operations (FFO) to debt to remain below our prior downgrade threshold of 8%. The company's weak financial measures reflect regulatory lag, the eventual discontinuance of the company's Rate Stabilization Charge (RSC), and a robust capital spending plan. - As such, we downgraded the issuer credit ratings (ICR) on DPL and AES Ohio by one notch to '##' from '##+'. Accordingly, we lowered all issue-level ratings one notch, but recovery ratings remain the same. At the same time,...

Research Update