S&P comments on proposals for Danish energy sector

LONDON Recent restructuring proposals by the Danish government are likely to result in considerable changes in the Danish energy industry over the coming years, says Standard & Poor's Ratings Services in a report published today.

The proposed changes could have a significant effect, in particular, on network distribution companies and high-voltage transmission companies. Furthermore, the proposals could lead to the creation of integrated electricity companies in Denmark. "Although the final impact on credit quality is yet to be determined, it is our view at this stage that the proposed changes are likely to be neutral or even slightly positive," said Standard & Poor's credit analyst Magnus Pettersson. A political majority has agreed in principle to several changes to the existing energy regulations and structures proposed by the government.

These include the creation of a single national energy transmission company; repayment of equity to end-users through lower tariffs; a change in taxation rules; and relaxation of ownership rules. The recent bid by Elsam A/S (A/Watch Neg/A-1) for NESA A/S, one of the major Danish network distribution companies, may be only the start of an expected restructuring and further liberalization of the currently fragmented Danish energy sector.

Reuters Power News