S&P stabilizes Berkshire Hathaway Energy view

S&P said it revised its outlook for Berkshire Hathaway Energy Co. to stable from negative and affirmed its ratings, including its A issuer credit rating.

Concurrently, the agency lowered the ratings for MidAmerican Energy Co. and MidAmerican Funding LLC by one notch, including the issuer ratings to A- from A, reflecting a revised group status assessment for the companies to ‘highly strategic’ from ‘core’. Furthermore, S&P downgraded the ratings for Nevada Power Co. and Sierra Pacific Power Co. by one notch, including the issuer ratings to A- from A, reflecting in the revised group status assessments for the companies to ‘strategically important’ from ‘core’. The outlooks are stable.

Finally, S&P placed PacifiCorp’s ratings on CreditWatch with negative implications.

“The outlook revision on BHE to stable from negative reflects our view that the company will continue to operate its large-scale diverse operations effectively while maintaining FFO to debt consistently between 15% and 17% between 2024 and 2026. We expect that BHE's extraordinary support for PacifiCorp will be limited and that further adverse outcomes in the James class action lawsuit will not lead BHE to significantly increase debt at the parent level to support the company,” S&P said in a press release.

In explaining the downgrades, the agency said, “Our one-notch downgrades of MidAmerican Energy, MidAmerican Funding, Nevada Power, and Sierra Pacific Power reflect our revised group status assessments for these companies. In light of BHE's recent disclosure that its support for PacifiCorp is effectively limited to PacifiCorp suspending its dividends and our view that PacifiCorp will depend on further external debt to fund its expected cash stockpile, we do not believe BHE will provide extraordinary support to its subsidiaries under all foreseeable circumstances and believe that extraordinary support will be limited under certain circumstances.”

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