Credit Rating agency Standard & Poors (S&P) cut the credit ratings of several southern California public power utilities and power projects in the wake of California's new electric deregulation law (AB 1890), and warned that they will face significant challenges under the new system. The Los Angeles Department of Water and Power (LADWP), the Burbank Public Service Dept, the cities of Pasadena and Anaheim, the Intermountain Power Agency and two public power authority projects have all been impacted.

S&P utility analyst Brad Driver told California Energy Markets that the downgrades reflect another "transition in the deregulation process," the passage of AB1890.

Driver added that the downgrade of Los Angeles' publicly owned utility partly reflects concerns about "the City Council's willingness to approve and implement strategic plans in a timely manner that will allow the department to lower costs and rates to be competitive by 2005."

The Los Angeles City Council uses its utility's revenues, electric capacity and billing operation for public purposes. LADWP pays $71.5 million per year to the city in gross revenue receipts, collects $500 million in taxes and fees, and provides $12 million worth of free electricity to the city for traffic signals and street lights.