Despite the unknowns, Standard & Poor’s credit-rating service apparently believes that California’s law and developing regulations on global warming are not undermining the creditworthiness of electricity suppliers. The notion is a far cry from the way credit agencies viewed the state’s utilities and regulatory environment during and after the 2000-01 energy crisis. “The most important thing is how much the regulatory response is going to cost,” said S&P analyst Swami Venkataraman May 15. “If the California Public Utilities Commission acts consistently, the costs may not be so high.” The price of meeting global warming initiatives is a “key factor” for credit quality, according to Venkataraman. Yet when costs are reliably covered by customers, companies can maintain their credit quality and borrow money for capital investments at a lower cost. At the same time, S&P believes that the developing climate change regulations should be phased in over a long period of time in order to “allow companies to adjust,” according to Venkataraman. The ratings agency – which corporations pay to rate their credit standing – noted that in the face of climate change regulation, unregulated power companies have much more credit risk exposure than regulated utilities. Credit quality was a non-issue for decades in California. However, during the energy crisis, utilities – as well as the state itself – had such a low credit rating that it caused borrowing costs to soar. California floated the largest state bond in history in 2003 for $11 billion to cover energy procurement through the Department of Water Resources. The state stepped in because utilities didn’t have either the money or the creditworthiness to buy their own power.