Moody's might downgrade Wisconsin Energy subsidiaries

Moody's Investors Service said it affirmed Wisconsin Energy Corp.'s A3 senior and Baa1 junior subordinated notes ratings and Wisconsin Energy Capital Corp.'s A3 senior rating. Moody's placed the long-term A1 senior ratings of Wisconsin Energy's operating subsidiaries Wisconsin Electric Power Co., Wisconsin Gas, LLC and Elm Road Generating Station Supercritical, LLC under review for possible downgrade.

Moody's also affirmed the commercial paper ratings for Wisconsin Electric Power and Wisconsin Gas at Prime-1.

The outlook for Wisconsin Electric Power is stable.

The affirmation of Wisconsin Electric Power's ratings considers the reduction in the family's risk profile and the highly visible earnings and cash flow streams generated by these assets, Moody's said. The company's A3 senior unsecured rating is underpinned by an above-average supportive regulatory environment as well as a conservative business and financial strategy.

The review for possible downgrade of the operating subsidiaries was triggered by Moody's re-evaluation of its notching practices. The agency said these subsidiaries have been rated two notches higher than the parent to reflect the considerable amount of holding company debt. Wisconsin Electric, however, has been rebalancing its balance sheet by issuing debt at operating subsidiaries and using proceeds, combined with proceeds from asset sales, to reduce holding company debt.

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