EDF Energy embedded debt needs addressing

Resumen de Prensa            Enervía, lunes, 29 diciembre 2003

FUENTE: Platts


Ratings agency Fitch on Wednesday affirmed the ratings of French utility, Electricite de France's UK subsidiary EDF Energy. This
affirmation also affects EDF Energy's subsidiaries -- EDF Energy Networks (EPN), EDF Energy Networks (SPN), CSW nvestments , and EDF Energy (South East), Seeboard (SEL) and EDF Energy Networks (LPN). EDF Energy has some embedded debt costs and the UK regulator Ofgem has indicated that it is not considering making allowances for embedded debt in the next
price control period. Synergy savings derived from combining the operation of EDF Energy's three distribution network usinesses and also from combining the operation of the group's supply businesses are expected to support cash flows over the next three to five years. Restructuring and refinancing the group's debt should also lead to a reduction in interest costs. EDF Energy refinanced some GBP800-mil of income preferred stock in the bond market reducing costs. Key issues that remain to be
addressed include how Ofgem will deal with increased pension costs and distributed generation. The introduction of a special
administrator regime (details of which are yet to be clarified) are not expected to materially impact the ratings. Tighter ring-fencing provisions, should they be introduced would be positive for the ratings.