OREANDA-NEWS. Fitch Ratings has published a Dashboard covering the return on equity (ROE) trends for the U.S Utilities, Power & Gas sector.

Authorized ROEs for electric and gas utilities have modestly trended down as the 9.53% median authorized ROE year-to-date is about 16bps lower than 2014 and 22bps lower than 2013 levels. The utilities have fared relatively well in rate cases since 2013, receiving, on average, approximately 55% of their rate requests. Fitch expects future regulatory decisions to remain broadly supportive of utility credit quality.

Utilities on average continue to earn below their authorized ROEs, with the gap rising to approximately 82bps in 2015 compared with 63bps in 2014 for a sample of 24 utilities analysed by Fitch. In general, Fitch expects utilities to gradually narrow the rate lag, given the greater use of periodic cost adjustment mechanisms outside of general rate cases, including rider-based recovery. The increased use of those mechanisms has contributed to a steady decline in rate case filings, which Fitch expects to continue in the short-term.

Fitch does not expect the projected rise in treasury rates to have a meaningful impact on authorized ROEs in the short-run, given that cost of capital adjustments are likely to be gradual as was evident when treasury rates were declining.