Aquila cuts staff to stave-off rating downgrade

An Aquila spokeswoman told RiskNews that the cuts are related to the company’s desire to fight a possible rating downgrade. The company launched an initiative, known internally as Project BBB+/Baa1, in March to reduce costs by $100 million and sell $500 million in non-core, non-strategic assets in an effort to improve its credit standing. But Moody's Investors Service yesterday moved to place the company under review for possible downgrade.

“Every market is still well covered, and when you consider that we employ 1,172 people in this division across the US, the cuts are negligible,” said the spokeswoman. “The whole energy industry is being challenged post-Enron, but I want to make it clear that the cuts were in no way related to the Federal Energy Regulatory Committee (Ferc) investigations.”

"We have completed a review of our trading practices for any evidence of the use of trading strategies identified by the Ferc and outlined in the Enron memos under review," Ed Mills, Aquila merchant service's president and chief operating officer said a statement released earlier this week.

"Our review indicates our trading activities during this time period were proper and in full compliance with the regulations and standards issued by the Ferc. We have found no evidence that Aquila conducted any of the identified Enron trading strategies.”