Washington (Platts)--29Jan2008

The fate of coal-fired generation and controlling greenhouse gas
emissions tops the list of important issues facing electric utilities in 2008
and beyond, Standard & Poor's said Tuesday in a new report.

"The single biggest challenge regulated electric utilities will tackle is
the discharge of carbon dioxide into the air," S&P said in the report, which
lists the top 10 issues electric utilities will face.

Three items that will have the biggest impact on electric utility credit
are integrated resource plans that reduce or eliminate the building of new
coal-fired power plants, the need for carbon sequestration on existing plants,
and research and development for cleaner coal technologies.

Also, a new administration in Washington next year likely will try to
make its mark on GHG emissions. Federal action seems remote until then,
however, said S&P.

S&P, like Platts, is a division of The McGraw-Hill Companies.

"Future legislation that crimps coal use and affects credit quality for
electric utilities is possible, but not certain at the moment, given past
stalemates on energy policy issues. Of course, this inertia is the worst of
all outcomes for electric utility managements and those who invest in their
fixed-income debt instruments," S&P said.

The electric power industry has reached a point where the phrase
"anything, everything, is possible" which was first used by Thomas Edison,
best describes the future credit quality, ratings and direction for the
industry, said S&P credit analyst John Whitlock.

Other items in the list include: customer expectations for reliability
and increasing demand; regulatory and legislative backlash from sizable rate
increases; renewable resources and state adoption of renewable portfolio
standards; transmission investment and bringing renewable resources onto the
grid; nuclear renaissance and construction of new plants; natural gas and
managing commodity-price risk; increased costs for construction and raw
materials; access to capital markets; and mergers, acquisitions and
divestitures.

--Tom Tiernan, tom_tiernan@platts.com