By OGJ editors
HOUSTON, May 18 -The credit quality of US water utilities such as Suez SA unit United Water Inc. could be hurt if energy legislation addressing methyl tertiary butyl ether (MTBE) is passed in its current form, said Standard & Poor's Ratings Services in a recent report.
Many water utilities, facing MTBE cleanup costs that could total $29 billion, have joined together in lawsuits against MTBE producers, including ExxonMobil Corp., Amerada Hess Corp., and Sunoco Logistics Partners LP, Philadelphia.
"However, the version of the energy bill recently approved by the US House of Representatives contains a safe-harbor provision, which protects MTBE makers by retroactively nullifying all MTBE defective product liability lawsuits filed since September 2003, including United Water's," said Standard & Poor's credit analyst Plana Lee.
Standard & Poor's expects the utilities to recover MTBE cleanup costs either through litigation or through rates.
"Nevertheless, this remains unchartered territory," said Lee. Even if recovery is granted by regulators, she said, the process could bring about regulatory lag and necessitate increased borrowing in the interim, "potentially harming water utility credit quality."
