Moody’s gives new FirstEnergy unit A3

Moody's Investors Service said it assigned a first-time A3 issuer rating to FirstEnergy Pennsylvania Electric Co. (FE PA), a newly created subsidiary of FirstEnergy Corp. The outlook is stable.

FE PA will be formed from the consolidation of FirstEnergy's four regulated electric distribution utilities in Pennsylvania: West Penn Power Co. (West Penn Power), Metropolitan Edison Co. (Met-Ed), Pennsylvania Electric Co. (Penelec), and Pennsylvania Power Co. (Penn Power). The consolidation is expected to close on Jan. 1.

Moody’s said it raised Penelec’s senior unsecured rating to A3 from Baa1 and the senior unsecured bank facility of West Penn Power, Penn Power and Met-Ed to A3 from Baa1 since FE PA will assume it.

The agency said it also affirmed the debt ratings of West Penn Power (A1 first mortgage bonds), Met-Ed (A3 senior unsecured) and Penn Power (A1 first mortgage bonds).

"As a regulated electric distribution utility in Pennsylvania, FE PA will exhibit a low business risk profile and operate under a credit supportive regulatory environment," stated Jairo Chung, a Moody's analyst, in a press release.

"FE PA will benefit from its increased size and scale and some added efficiency from operating as a single distribution utility compared to its four individual utility predecessors," Chung added.

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