Uncertain outlook for US public power

Moody's has forecast a stable credit outlook for the US public power electric utility sector in 2009, but says the recession and environmental regulations could present challenges.

Outlining its forecast for the sector this year, Moody's 2009 US Public Power Electric Utility Sector Outlook report argued public power's monopoly position as the provider of an essential service, as well as the ability to recover costs through an unregulated local rate-setting process should help the sector maintain stability this year.

However, the recession is expected to reduce demand for electricity, which could put pressure on utilities' ratings. This lower demand could affect debt service