Fitch Ratings has affirmed AVANGRID Inc.'s (AVANGRID) Long-Term and Short-Term Issuer Default Ratings (IDR) at 'BBB+' and 'F2', respectively, and revised its Rating Outlook to Stable from Negative.
Fitch has also affirmed the Long-Term IDRs of AVANGRID's following utility subsidiaries: The Berkshire Gas Company (BGC; A-/Stable); Central Maine Power Company (CMP; BBB+/Stable); Connecticut Natural Gas Corporation (CNG; A-/Stable); New York State Electric & Gas Corporation (NYSEG; BBB+/Stable); Rochester Gas and Electric Corporation (RGE; BBB+/Stable); The Southern Connecticut Gas Company (SCG; A-/Stable); and The United Illuminating Company (UI; A-/Stable). The Rating Outlook for all rated subsidiaries is Stable.
Affirmation of AVANGRID's IDR at 'BBB+'/Outlook Stable considers rating linkage with ultimate corporate parent Iberdrola (BBB+/Stable) and the resulting rating uplift from AVANGRID's standalone credit profile (SCP) under Fitch's Parent and Subsidiary Linkage Rating Criteria. Fitch believes AVANGRID's SCP is consistent with a 'BBB' rating in its base case which assumes the merger with PNM Resources Inc (PNMR) is completed, closing in 2023. In that scenario, AVANGRID's business risk profile improves and leverage would spike higher in 2023 and 2024 before improving to below 5.5x in 2025. Regulated utility operations would represent approximately 80% of consolidated AVANGRID cash flow, up from approximately 70% prior to merger close.
If regulators were to reject AVANGRID's proposed acquisition of PNMR, FFO leverage would improve compared to our base case, averaging around 4.7x over the next three years, with no improvement in business mix. In this instance, Fitch believes AVANGRID's SCP would remain consistent with a 'BBB+' rating.
Key Rating Drivers
Uplift From Iberdrola Support: Fitch determines AVANGRID's SCP to be 'BBB' based upon consolidated metrics, which is one-notch below Iberdrola's 'BBB+' rating. The linkage between AVANGRID and Iberdrola follows a strong parent/weak subsidiary approach and as such Fitch has equalized the IDRs of AVANGRID and Iberdrola.
In applying its Parent and Subsidiary Linkage Rating Criteria, Fitch scores legal incentives at medium as approximately 20% of Iberdrola's total debt has cross-default provisions or winding-up provisions with AVANGRID. Strategic incentives are medium as Iberdrola owns 81.6% of the common shares of AVANGRID, and AVANGRID receives material financial contribution from Iberdrola (over $3 billion in the last two years) and approximately 40% of Iberdrola's growth is expected to come from AVANGRID.
Fitch views operational incentives as weak as 70% of the AVANGRID's EBITDA is derived from regulated U.S. entities with little operational overlap with Iberdrola's other businesses other than on the offshore wind projects. While there is a level of integration between management teams, AVANGRID has an independent treasury function and, as a publicly traded entity, can access equity separately. As a result of stronger parent linkage factor assessments, Fitch has equalized AVANGRID's rating with Iberdrola. If AVANGRID's SCP were to be two or more notches lower than Iberdrola under the same linkage factors, Fitch would limit AVANGRID's rating uplift to one-notch lower than Iberdrola.
Mostly Regulated Business Mix: AVANGRID's utilities provide electric transmission and distribution (T&D) and natural gas distribution service in parts of New York, Connecticut, Maine and Massachusetts. Fitch considers the low risk nature of the operations to be supportive of credit quality. Additionally, CMP and UI have a large and beneficial exposure to electric transmission assets regulated by the Federal Energy Regulatory Commission (FERC), which account for nearly 21% of AVANGRID's consolidated rate base.
Fitch believes AVANGRID's renewable energy business (mostly contracted 9.2GW, accounting for 30% of 2022 EBITDA) has a moderately higher risk profile than the company's regulated utilities. Fitch views favorably, the company's decision to find a 60% partner for its onshore renewable growth going forward, as it mitigates need for growth financing.
Weak Regulatory Environment: While Fitch considers AVANGRID's utility operations to be of relatively low risk, AVANGRID's regulatory environment is considered to be more challenging, reflecting recent performance issues in Maine and Connecticut. Authorized ROEs tend to be below the nationwide average, particularly for the New York and Connecticut utilities. To the positive, AVANGRID's utilities continue to benefit from cost-recovery and revenue-stabilizing mechanisms, such as revenue decoupling that, which help reduce regulatory lag and provide cash flow stability.
Higher Leverage with PNMR Merger: In its base case, with the closing of the PNMR merger, Fitch calculates AVANGRID's leverage to be elevated in 2023-2024, returning to below 5.5x by YE 2025 assuming the company does issue $1.9 billion of equity as indicated by management. Fitch also incorporates additional cashflows and debt associated with Vineyard Wind, in line with management's assumptions. Excluding the PNMR merger, Fitch estimates FFO leverage will remain stable averaging 4.7x in 2023-2025.
PNMR Merger Uncertain: In October 2020, the company reached an agreement to acquire PNMR. In January 2023, a new three-member commission appointed by the governor took over in New Mexico, after the previous five-member elected commission had unanimously rejected the merger. As of February, one of the three commission members recused themselves from the process and, in Fitch's opinion, successful close of the transaction is uncertain. However, Fitch incorporates it in its base case as the merger is indicative of management policy and, if it fails, funds would be deployed for other growth opportunities.
Offshore Wind Adds Risk: Vineyard Wind, AVANGRID's 50/50 joint venture with Copenhagen Infrastructure Partners (CIP), is developing an 800MW offshore wind farm southeast of Martha's Vineyard. Permits have been received and construction has commenced but given the bespoke nature of the development, execution risk remains. The project's all-in cost is expected to be approximately $4.0 billion, about 12% of which will be financed with the sponsor's equity, 30% with tax equity and the remainder with project level debt. The project is expected to start operations by YE 2023 and be fully operational in 2024, adding significant contracted cashflows.
AVANGRID has filed to terminate its PPA for the 1.2 GW Commonwealth Wind project off the coast of New England. The company views the current contract terms as being weak for profitable development given the escalation in costs over the last 3-4 years. The company will likely need to pay a manageable termination fee to exit the project. In Fitch's view, AVANGRID's role in the project is uncertain once a path forward has been determined by the regulators. Commonwealth Wind had a 2028 expected completion date. Earlier, expected in-service date of the 804MW Park City Wind project in Connecticut was also delayed by about a year to 2027.
Large Capex Plan: Capex is elevated at both the regulated utilities and the renewable energy business totaling $10 billion over the next three years. The electric and natural gas utilities are ramping up infrastructure spending primarily to enhance safety and grid resilience, comprising around 88% of the total. $6.5 billion of additional funding would be required for closing the PNMR transaction and subsequent capex.
AVANGRID's NECEC electric transmission project includes a 145-mile transmission line that would provide New England with 1,200MW of hydroelectric generation capacity from Quebec, Canada. NECEC is expected to cost over $1.4 billion, a portion of which has already been spent. The project is still awaiting legal approvals to commence construction after a previous voter ballet to stop construction was overturned by the courts. At this time, Fitch assumes its in-service date will be beyond 2025.
Utility Parent/Subsidiary Linkage: There is parent subsidiary linkage between AVANGRID and its rated utility subsidiaries. Fitch considers the utility subsidiaries to have stronger SCPs then AVANGRID. As a result, the linkage between AVANGRID and utility subsidiaries is assessed following weak parent/strong subsidiary factors. Emphasis is placed on the subsidiaries' status as regulated entities. Legal ring fencing is porous given the general protections afforded by economic regulation, and access and control are also porous.
AVANGRID centrally manages the treasury function for all of utility subsidiaries and is the sole source of equity; however, each subsidiary issues its own long-term debt. Due to the aforementioned assessment, Fitch will limit the difference between AVANGRID and any of its higher rated regulated subsidiaries to two notches.
New York State Electric & Gas Corporation
Somewhat Challenging Regulatory Environment: Fitch considers the regulatory environment in New York state to be somewhat challenging. ROEs authorized by the New York Public Service Commission (NYPSC) are among the lowest in the U.S., and New York has a history of political involvement in the regulatory process. However, ratemaking features such as revenue decoupling, a commodity pass-through mechanism and use of a forward-looking test year support NYSEG's stable financial profile.
Recent Rate Case Filing: NYSEG filed a three-year rate plan on May 26, 2022 for new rates effective Sept. 30, 2023. The company is requesting an electric rate increase of $273.9 million and a gas rate increase of $43.4 million. The filing is based upon a 10.2% ROE and 50% equity capitalization. In addition to return on invested capital, requests are attributable to infrastructure investments, customer support resources, energy efficiency programs, and investments to enable renewable energy and economic development. In September 2022, the staff filed testimony based on an 8.85% ROE and 48% equity capitalization. Fitch expects a constructive outcome, slightly higher than previous rate cases. A final decision is expected by May 2023.
Rate Case Completed in November 2020: NYSEG filed electric and natural gas rate cases with the NYPSC on May 20, 2019. Subsequent revisions requested increases of $162.7 million in electric distribution rates and $4.1 million in natural gas distribution rates. The three-year rate plan was approved in November 2020, and provided an 8.8% ROE and a 48% equity ratio with earnings sharing on 50% equity. The rates facilitate NYSEG's transition to cleaner energy and incorporate initiatives, such as vegetation management, reliability, infrastructure and advanced metering infrastructure investments and provide relief to customers on continuing coronavirus challenges ($16.5 million).
Stable Financial Metrics: NYSEG's financial metrics should remain supportive of the ratings, with a modest revenue increase provided by the multiyear rate plan. Fitch expects both FFO leverage to average 4.5x through 2025.
Rochester Gas and Electric Corporation
Somewhat Challenging Regulatory Environment: Fitch considers the regulatory environment in New York state to be somewhat challenging. ROEs authorized by the NYPSC are among the lowest in the U.S., and New York has a history of political involvement in the regulatory process. However, ratemaking features, such as revenue decoupling, a commodity pass-through mechanism and use of a forward-looking test year, support RGE's stable financial profile.
Recent Rate Case Filing: NYSEG filed a three-year rate plan on May 26, 2022 for new rates effective Sept. 30, 2023. The company is requesting an electric rate increase of $93.8 million and a gas rate increase of $37.7 million. The filing is based upon a 10.2% ROE and 50% equity capitalization. In addition to return on invested capital, requests are attributable to infrastructure investments, customer support resources, energy efficiency programs, and investments to enable renewable energy and economic development. In September 2022, the staff filed testimony based on an 8.85% ROE and 48% equity capitalization. Fitch expects a constructive outcome, slightly higher than previous rate cases. final decision is expected by May 2023.
Rate Case Completed in November 2020: RGE filed electric and natural gas rate cases with the NYPSC on May 20, 2019. Subsequent revisions requested increases of $38.7 million in electric distribution rates and $1.8 million in natural gas distribution rates. The three-year rate plan was approved in November 2020, and provided an 8.8% ROE and a 48% equity ratio with earnings sharing on 50% equity. The rates facilitate RGE's transition to cleaner energy and incorporate initiatives, such as vegetation management, reliability, infrastructure and advanced metering infrastructure investments, and provides relief to customers on continuing coronavirus challenges ($13.5 million).
Stable Financial Metrics: RGE's financial metrics should remain supportive of the ratings, with a modest revenue increase provided by the three-year rate plan that became effective May 1, 2020. Fitch expects FFO leverage to average 4.3x through 2025.
The United Illuminating Company
Challenging Regulatory Environment: Fitch considers the regulatory environment for electric utilities in Connecticut to be challenging. Recent actions by the Connecticut Public Utilities Regulatory Authority (PURA) to lower authorized ROEs and impose additional penalties related to storm performance have resulted in a meaningfully less-constructive regulatory environment for electric utilities, reversing improvement that had occurred over the past decade. ROEs tend to be below the industry average and periodically include performance penalties.
PURA authorizes UI to earn an ROE of just 9.1%, well below the nationwide average for an electric utility. PURA's April 2021 order for a 15bps reduction to UI's allowed ROE due to poor performance in responding to Tropical Storm Isaias is in the settlement process. Mitigating some of these challenges are rate-making features, such as revenue decoupling, that help provide some cash flow stability.
Recent Rate Case Filing: UI filed a rate case on Sept. 9, 2022 for new rates effective September 2023. The company is requesting an electric rate increase of $136.5 million to fund its three-year investment plan. The filing is based upon a 10.2% ROE and 52% equity capitalization. In addition to return on invested capital, 44% of the request is for reliability and resiliency improvement, and about 36% is for clean energy innovation and grid modernization efforts for customers and includes an investment tracker. Fitch expects a constructive outcome, similar to prior rate cases. A final decision is expected by the end of 3Q23.
FERC-Regulated Electric Transmission: UI's FERC-regulated electric transmission assets account for more than one-third of rate base. Fitch considers FERC regulation to be among the most constructive in the utilities sector due to formula rates, strong and predictable cash flows and timely recovery of invested capital. FERC's constructive oversight of UI's growing electric transmission business helps counterbalance Connecticut's somewhat restrictive regulatory environment for electric utilities.
Stable Financial Metrics: The constructive outcome to UI's 2016 distribution rate case, followed by rate increases in 2019 strengthened UI's financial metrics. Fitch expects FFO leverage to average 3.5x through 2025.
Connecticut Natural Gas Corporation
Relatively Balanced Regulatory Environment: Fitch considers the regulatory environment overseen by PURA to be relatively balanced for natural gas distribution utilities. Authorized ROEs are below the nationwide average, but PURA allows beneficial ratemaking features, such as revenue decoupling and a purchased gas adjustment clause. Costs associated with the replacement of cast iron and bare steel pipe and for system expansion to underserved areas are recovered through cost-recovery mechanisms outside general rate case proceedings.
2018 Multiyear Rate Case Settlement: Fitch deems the outcome of CNG's last rate case to be constructive and supportive of credit quality. PURA adopted a settlement agreement on Dec. 19, 2018, authorizing CNG a total of $19.7 million in rate increases over three years. The plan includes a $9.9 million increase effective Jan. 1, 2019, a $4.6 million increase effective Jan. 1, 2020 and a $5.2 million increase effective Jan. 1, 2021. CNG received a 9.3% authorized ROE and an equity capital structure that started at 54% in 2019 and increased to 54.5% in 2020 and 55% in 2021.
Robust Financial Metrics: CNG's financial metrics are very strong, benefiting from management's conservative capitalization structure. Fitch expects FFO leverage to average 2.2x through 2025.
The Southern Connecticut Gas Company
Relatively Balanced Regulatory Environment: Fitch considers the regulatory environment overseen by PURA to be relatively balanced for natural gas distribution utilities. Authorized ROEs are below the nationwide average, but PURA allows beneficial ratemaking features, such as revenue decoupling and a purchased gas adjustment clause. Costs associated with the replacement of cast iron and bare steel pipe, and for system expansion to underserved areas are recovered through cost-recovery mechanisms outside general rate case proceedings.
2017 Multiyear Rate Case Settlement: Fitch deems SCG's rate plan to be constructive and supportive of credit quality. PURA adopted a settlement agreement on Dec. 13, 2017, authorizing SCG a total of $11.2 million in rate increases over three years. The plan includes a $1.5 million increase effective Jan. 1, 2018, a $4.7 million increase effective Jan. 1, 2019 and a $5 million increase effective Jan. 1, 2020. SCG received a 9.25% authorized ROE and an equity capital structure greater than 52%. The agreement allowed for revenue decoupling and ratemaking mechanisms related to cast iron and bare steel replacement and system expansion.
Solid Financial Metrics: SCG's financial metrics became more stable and predictable as a result of the rate case settlement and are expected to remain solid through the forecast. Fitch expects FFO leverage to average 3.5x through 2025.
Central Maine Power Company
Somewhat Challenging Regulatory Environment: Fitch considers the regulatory environment overseen by the Maine Public Utilities Commission (MPUC) to be somewhat challenging. Ratemaking features such as full revenue decoupling and a recovery mechanism for incremental storm restoration costs support CMP's stable financial profile.
Recent Rate Case Filing: CMP rate case filed on Aug. 11, 2022. The company is requesting a multi-year rate increases totaling about $100 million. The filing is based upon a 10.2% ROE and 50% equity capitalization. In addition to return on invested capital, requests are attributable to increased capital investment related to grid improvements, reliability spend, clean energy initiatives, increased actual storm expense beyond that allowed in rates, and increased operation and maintenance expense. In its bench analysis as of Dec. 5, 2022, staff recommended a 9.00% ROE. Fitch expects a constructive outcome, similar to previous rate cases. New rates are expected to be effective Aug. 1, 2023.
2018 Rate Case Order: Fitch deems the outcome of CMP's last rate case to be moderately restrictive. On Feb. 19, 2020, the MPUC authorized CMP a $17.4 million rate increase effective March 1, 2020, based on a 9.25% ROE and a 50% equity capital structure. The MPUC also imposed a 1.00% reduction to 8.25% for a minimum of 18 months as a penalty for poor customer service following the implementation of CMP's new billing system in 2017. By end-August 2021, CMP met the necessary conditions to lift the penalty (18 consecutive months of attaining four different customer service metrics), and have filed to remove the penalty in September 2022.
FERC-Regulated Electric Transmission: CMP's large electric transmission business accounts for roughly two-thirds of rate base and is subject to oversight by the FERC, which Fitch considers to be among the most constructive regulatory bodies in the utilities sector. FERC-regulated electric transmission assets receive formula rates, strong and predictable cash flows and timely recovery of invested capital. FERC's constructive oversight of CMP's large electric transmission business helps counterbalance Maine's somewhat restrictive recent rate order.
Strong Financial Metrics: CMP's financial metrics are strong for the rating, supported by stable cash flows from the utility and its transmission business. Fitch expects FFO leverage to average 4.1x through 2025.
The Berkshire Gas Company
Low-Risk Utility Operations: BGC has a low-risk business profile. The utility provides an essential service, benefits from monopolistic characteristics in its service territory, earns a regulated return on investment and has no commodity exposure.
Supportive Regulatory Environment: Fitch considers the regulatory environment overseen by the Massachusetts Department of Public Utilities (DPU) to be supportive of BGC's strong financial profile. BGC has a purchased-gas cost adjustment clause with semiannual resets and a mechanism that recovers losses due to energy efficiency programs. Full revenue decoupling provides further stability to earnings and cash flow.
Recent Rate Case Settlement: CMP's new base rates went into effect Jan. 1, 2023, with a step increase in Jan. 1, 2024. The distribution rate allows for increase of up to $5.7 million at an 9.70% ROE and 54% equity capitalization, similar to the current rates. The new rates improve recovery of property taxes and shared service costs, provides for funding for additional resources and recovery of historic investments through end of 2022. Fitch views the outcome as constructive and supportive of credit quality and now BGC is expected to stay out through November 2025.
Rate Case Settlement in 2018: Fitch deems the outcome of BGC's prior rate case to be constructive and supportive of credit quality. The DPU adopted a settlement agreement on Jan. 18, 2019, authorizing BGC a $2.4 million rate increase. BGC received a 9.7% authorized ROE and a 54% equity capital structure.
Robust Financial Metrics: BGC's financial metrics are strong, benefiting from management's conservative capitalization structure. Fitch expects FFO leverage to average 3.6x through 2025.
Derivation Summary
AVANGRID is somewhat weaker than its peers at the 'BBB+' Long-Term IDR. AVANGRID's business risk profile is supported by the company's ownership of low-risk, regulated electric and natural gas utilities. The utility subsidiaries of AVANGRID and peer Eversource Energy (BBB+/Stable) operate in some of the same states in the Northeast in regulatory environments that have grown weaker. AVANGRID and Eversource both benefit from a meaningful amount of regulatory diversification and significant exposure to electric transmission assets that are regulated by FERC, favorable factors that peer Consolidated Edison, Inc. (BBB+/Stable) lacks.
AVANGRID's unregulated renewable energy business accounts for around 20% of consolidated EBITDA, weakening AVANGRID's business risk profile. AVANGRID and Eversource are also engaged in the development of large offshore wind projects in the Northeast, which include increased risk during the multiyear permitting and construction phases, but would provide long-term contracted cash flow once in operation. AVANGRID has increasing uses of cash to fund its renewable projects and Fitch expects AVANGRID's FFO leverage to reach 5.3x by YE 2025, and between 5.0x and 5.4x for Eversource over the same period.
Key Assumptions
Fitch's Key Assumptions Within its Rating Case for the Issuer Include:
PNMR merger completed in 2023 for $9.5 billion;
$1.9 billion of equity raised in 2024;
Total capex in-line with management assumptions;
Networks rate base growing at 7% CAGR through 2025;
Offshore wind projects: Vineyard Wind I commence service in 2023, with full capacity reached in 2024. No other offshore wind project capex budgeted in the forecast period;
Rate case outcomes in New York slightly stronger than prior years;
Asset sales totaling $1.6 billion;
Adjusted earnings per share CAGR of 6%-7% through 2025;
Targeted payout ratio of 65%-75%;
Normal weather.
RATING SENSITIVITIES
AVANGRID, Inc.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
An upgrade at Iberdrola along with AVANGRID's FFO leverage to remain less than 4.8x on a sustained basis;
The weaker credit profile of AVANGRID's nonregulated renewable energy portfolio, which accounts for over a quarter of consolidated EBITDA, makes a positive rating action unlikely unless the consolidated credit profile of the utilities significantly improves; AVANGRID's larger utilities would all need to be upgraded to 'A-'.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
FFO leverage expected to exceed 5.5x on a sustained basis;
A negative rating action also could occur if Iberdrola were downgraded below 'BBB' along with a decline in AVANGRID's SCP;
Significant delays, cost-overruns or other concerns related to the development of the company's offshore wind projects that would meaningfully negatively affect the company's cash flow profile;
Adverse regulatory actions or other events that result in downgrades to AVNAGRID's utility subsidiaries.
NYSEG, RGE
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Significant improvement in the New York regulatory environment, including authorized ROEs more in line with the national average and less political involvement in the regulatory process;
FFO leverage expected to remain less than 3.8x on a sustained basis.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
FFO leverage expected to exceed 4.8x on a sustained basis;
An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.
UI
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Improvement in Connecticut's regulatory environment, including authorized ROEs more in line with the national average;
FFO leverage expected to remain less than 3.3x on a sustained basis.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
FFO leverage expected to exceed 4.3x on a sustained basis;
An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.
BGC, CNG, SCG
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A positive rating action is not likely due to the utility's small scale of operations.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
FFO leverage expected to exceed 4.4x on a sustained basis;
An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.
CMP
Factors that could, individually or collectively, lead to positive rating action/upgrade:
FFO leverage expected to remain less than 3.8x on a sustained basis.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
FFO leverage expected to exceed 4.8x on a sustained basis;
An adverse regulatory decision that meaningfully reduces the stability and predictability of earnings and cash flow.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
Liquidity and Debt Structure
Adequate Liquidity: Fitch considers the liquidity for AVANGRID and each of its regulated utility subsidiaries to be adequate. AVANGRID's liquidity is primarily supported by the company's $2.0 billion CP program, which is backstopped by a $3.575 billion revolving credit facility (RCF) that matures on Nov. 22, 2026. AVANGRID shares this RCF with seven of the company's regulated utility subsidiaries: BGC, CMP, CNG, NYSEG, RGE, SCG and UI. The RCF contains maximum sublimits of $2.5 billion for AVANGRID at the parent level; $700 million for NYSEG; $300 million for RG&E; $200 million for CMP; $250 million for UI; $150 million each for CNG and SCG; and $50 million for BGC. There were $397 million of CP and no RCF borrowings outstanding as of Dec. 31, 2022, leaving $3.178 billion of availability under the RCF.
AVANGRID uses its CP program as a source of funding to provide its regulated utility subsidiaries with loans under a bilateral credit agreement. CMP, NYSEG, RGE and UI each can borrow up to $500 million under the agreement; CNG and SCG can each borrow up to $250 million and BGC can borrow up to $50 million.
The regulated utilities participate in a virtual money pool, which allows AVANGRID's investment grade regulated utility subsidiaries to lend to or borrow from each other, enabling AVANGRID to efficiently manage the cash at its regulated utilities. CMP, CNG, NYSEG, RGE, SCG and UI each have a lending/borrowing limit of $100 million, and BGC has a lending/borrowing limit of $15 million.
AVANGRID also has a $500 million credit facility with Iberdrola Financiacion, S.A.U., a subsidiary of Iberdrola. This facility matures on June 18, 2023 and had no borrowings outstanding as of Dec. 31, 2022. AVANGRID and its regulated utilities require modest cash on hand to fund their operations, and it had $69 million of unrestricted cash and cash equivalents as of Dec. 31, 2022.
Long-term debt maturities over the next five years are manageable.
Issuer Profile
AVANGRID is a diversified energy and utility holding company that operates eight regulated utilities serving about 3.3 million customers in New York, Connecticut, Maine and Massachusetts. It also owns a total installed capacity of 9.2GW, primarily wind and solar power, as of Dec. 31, 2022.
Summary of Financial Adjustments
50% equity credit for preferred stock of CMP and CNG.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg
AVANGRID, INC. 
