Add the New Jersey-based Public Service Electric & Gas to the list of power peddlers with longtime-pending stranded-cost securitizations.
Though originally planning to hit market last quarter, PSE&G now expects to launch its $2.4 billion power-backed deal sometime "before mid-year," said a spokesman for Public Service Enterprise Group, the parent company of PSE&G.
"We originally had scheduled to float those bonds in November," he said. "But there was an appeal by the New Jersey Business Users Group to the whole restructuring decision handed down by the Board of Utilities and as a result that securitization has been put on hold pending the outcome of this case."
It's just another day in stranded-cost land, market sources say.
"There's just a lot of moving parts to these deals," said Susan Mullin, a vice president of Duff & Phelps Credit Rating Co. Mullin has worked on stranded-cost deals and other new asset types, including the tobacco settlement-backed deals.
"It's largely because the deals are legislatively driven," she explained. "You're going to have people that object to different portions of the legislation, and until you get that all worked out, a lot of time passes."
Utility deals have exposure to political risk because the deals are made possible through language set down in deregulation legislation for the particular state they reside in.
"And it's different in every state," Mullin pointed out. "It has to be based on a law, and everyone has to get to the point where they, for the most part, agree upon the law. And that's what takes the most time. The agreement part."
Regardless, the PSEG spokesman said, "We're looking at both the satisfactory resolution of the court appeal and the securitization to occur before mid-year."
As originally planned, the $2.4 billion deal is being managed by Lehman Brothers Inc., and includes an $125 million piece to cover financing costs.
In related news, utilities companies in Texas have faced similar difficulties. The Texas Public Utility Commission recently gave TXU Electric, a subsidiary of Texas Utility Co., an eight-week extension so the parties involved could reach a settlement in the company's bid to issue its $1.65 billion stranded-cost deal. TXU had filed an application to securitize with the Texas Utility Commission in October.
Similarly, Central Power & Light, another Texas-based utility company, had filed for a delay to give parties more time to negotiate and reach a settlement. The company expects to have a financing order from the TPUC in the first week of February.