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Ratings agency Standard and Poor's says rising gas prices and a lack of material gasfield discoveries remain "significant" risks for New Zealand's energy utilities.
Those factors made the utilities more vulnerable in the medium-to-long term, according to the ratings service's report Industry Report Card: Gas Prices Remain Achilles' Heel For New Zealand Utilities.
The report discussed concerns surrounding long-term gas supplies in New Zealand, including the credit implications of an escalation in energy project costs, S&P said today.
Other industry issues affecting the credit quality of New Zealand utilities and ports were also examined, including regulatory changes and the impact of inherently volatile hydrological conditions.
"Issues relating to gas supplies and higher prices have not affected credit quality so far, but they remain a focus area for evaluation," S&P credit analyst Richard Creed said.
"Although uncertainty surrounds the magnitude of further price increases, the extent to which increased gas costs can be passed on to end consumers, and the potential competitive advantage conferred on non-thermal generators will drive the sector's overall credit profile."
S&P rates nine New Zealand-based electricity, gas, port, and water companies.
- NZPA
