The financial performance of the Ontario local distribution companies (LDC), regulated by the Ontario Energy Board (OEB), have gradually weakened, primarily reflecting regulatory lag. We view this development as negative for credit quality, which could possibly lead to us reassess Ontario's regulatory framework. We affirmed our ratings on Entegrus Powerlines Inc. (EPI), including our 'A' issuer credit rating. We revised the outlook to negative from stable. The negative outlook reflects the possibility that we could reassess our view of the Ontario regulatory framework because of regulatory lag that has weakened financial performance, increased cash flow volatility, and weakened financial predictability. The negative outlook on EPI reflects our view that we could downgrade the company by one or more notches over
