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Fitch downgrades Mississippi Power, revises Southern to negative
Fitch Ratings said it downgraded Mississippi Power Co.'s long-term issuer default rating to BBB+ from A-, senior notes to A- from A and preferred securities to BBB from BBB+. The outlook remains negative.
Mississippi Power is the wholly owned subsidiary of Southern Co. Fitch affirmed the issuer default rating for Southern at A and revised its outlook to negative from stable.
The agency said the downgrade and continuation of the negative outlook for Mississippi Power is driven by still elevated risks surrounding the Kemper Integrated Gasification Combined Cycle project, which include the regulatory uncertainty around the recovery of costs and execution risk associated with the completion of the project within currently estimated cost and timeline.
Specifically, Fitch is concerned with the inability of Mississippi Power to reach a settlement with the Mississippi Public Utility Staff on Kemper cost recovery and the uncertainty induced by Mississippi Supreme Court's unfavorable decision that voids the current rate plan in effect.
The outlook revision to negative for Southern is driven by the simultaneous undertaking of two large and complex generation projects, i.e., the Kemper IGCC project and Vogtle nuclear units 3 and 4, both of which have seen material construction delays and rising regulatory concerns, which have weakened the profile of Southern at its current rating level.
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