Fitch Ratings has revised the Rating Outlook for the Long-Term Issuer Default Rating (IDR) to Negative from Stable for AltaGas Ltd. (AltaGas), wholly owned subsidiary WGL Holdings, Inc. (WGLH) and Washington Gas Light Company (WGL).
Fitch has also affirmed AltaGas' and WGL's Long-Term IDRs and Short-Term IDRs at 'BBB'/'F3' and 'A-'/'F2', respectively. Fitch has additionally affirmed WGLH's Long-Term IDR at 'BBB'.
The Negative Outlook reflects Fitch's expectation that FFO leverage will remain higher for longer reaching 5.7x by YE 2025, inclusive of expected asset sales. AltaGas' FFO leverage averaged 7.4x over the last four years. Elevated midstream capex along with delayed monetization of Mountain Valley Pipeline (MVP) have weakened the credit profile. Opportunistic expansion of its midstream business including development of Pipestone II and Ridley Island Energy Export Facility (REEF) will require capex of over CAD1.5 billion from 2024-2026, funded with debt and internal cash flows. Continued expansion in the more volatile midstream segment is a concern from a business risk perspective.
Fitch could lower AltaGas' ratings if FY 2024 FFO leverage exceeds 6x or FY 2025 leverage exceeds 5.5x. Fitch could revise the Outlook to Stable is able to reduce FFO-leverage is sustainably below 5.5x by in 2025 and beyond.
WGL's and WGLH's Outlooks have been revised to Negative reflecting Fitch's parent subsidiary rating linkage (PSL) criteria.
Key Rating Drivers
AltaGas and WGLH
High Leverage: AltaGas' FFO-leverage has averaged 7.4x over the last four years and stood at 7.1x in 2023, considerably higher than expected. Elevated midstream capex, including the Pipestone acquisition and subsequent development of Phase II, and the weaker than expected rate case in Maryland continue to pressure leverage. Fitch expects development of projects to continue, including CAD675 million in capital requirement for AltaGas' portion of REEF. Partially funded with debt, this spend will offset expected improvement in leverage from cost optimization, utility customer growth averaging 1%, efficient utility capital allocation and debt reduction from asset sales.
In 2023, AltaGas sold utility and related operations in Alaska, with the resulting proceeds of CAD1.1 billion applied toward debt reduction. The monetization of AltaGas' share of MVP, which Fitch expects will be completed in 2025, will also be used to lower debt. Fitch expects deleveraging from these transactions will result in improvement in FFO leverage to 5.7x in 2025, higher than Fitch's downgrade threshold of 5.5x. Absent other concrete measures to lower leverage, Fitch would lower the ratings.
Weak Business Mix: Fitch views the high proportion of midstream contribution to be a weakness as it has greater volatility than utility earnings. More stable utility operations will contribute approximately 55%-60% of cash flow over the long term. The remainder will largely come from partially contracted midstream operations and smaller power generation operations, averaging between 43% and 46% over the next three years. Fitch calculates largely debt-funded midstream capex offsets the funding from the monetization of MVP. Non-utility operations sustained over 45% may lead to a ratings downgrade.
Volatility from Midstream Segment: Approximately 80% of midstream EBITDA is derived from investment-grade counterparties, lending stability to cash flow. Contractual structure has improved, with tolling levels increasing to approximately 56% of capacity starting second quarter of 2024. Approximately 95% of global export volumes for the remainder of 2024 are either tolled or financially hedged. With shorter transportation times, AltaGas is competitively positioned to service growing NGL (natural gas liquid) demand in Asia.
However, year-to-year cash flow is exposed to pricing differentials between the U.S. and Asia. Failure to lock in this differential in 3Q22 squeezed butane margins, adversely affecting midstream EBITDA. Management modified its hedging strategy by locking in a higher percentage of firmly committed and merchant volumes and managing the propane-butane product mix, which improved margin realization. Hedges for the year are executed largely starting in the first quarter, and price differentials can be volatile depending upon global market factors. For example, average hedged price for export volumes are USD17.88/bbl for 2024, compared to USD12.17/bbl in 2023, a 47% difference in one-year. Future inefficient hedging or increased exposure to market risk may result in negative rating action.
Additional Regulatory Risks: AltaGas' diversified group of relatively low-risk U.S. gas-distribution utilities serve approximately 1.6 million customers in parts of Maryland, Virginia, the District of Columbia (DC) and Michigan under generally credit supportive economic regulation. Fitch believes the regulatory compacts in Maryland and Virginia remain balanced, although election changes in Maryland have introduced a measure of uncertainty. Earned ROEs remain well below allowed ROEs due to regulatory lag and lack of weather decoupling in DC and Michigan. A significant unexpected deterioration in rate regulation could result in future credit rating downgrades.
PSL - AltaGas and WGLH: WGLH's Outlook was revised to Negative due to its PSL with AltaGas. Fitch analyzed parent-subsidiary rating linkage between AltaGas and intermediate holding company subsidiary WGLH by utilizing the strong subsidiary path laid out in Fitch's 'Parent and Subsidiary Linkage Rating Criteria'. Legal ring-fencing and access and control are each evaluated as open, resulting in consolidated ratings for AltaGas and WGLH. WGLH, unlike AltaGas's utility subsidiaries, is not subject to rate regulation. Its strategy and treasury functions are centrally managed by AltaGas.
PSL - WGLH and WGL: WGL's Outlook was revised to Negative due to its parent-subsidiary linkage (PSL) with WGLH. There is a parent subsidiary linkage between WGLH and WGL. Fitch determines AltaGas' Standalone Credit Profile (SCP) based upon consolidated metrics. Fitch considers WGL to have stronger SCP than WGLH. As a result, the linkage between WGLH and WGL is assessed following the weak parent/strong subsidiary path. Emphasis is placed on the subsidiary's status as a regulated entity.
Legal ring-fencing is porous, given the general protections afforded by economic regulation, and access and control are also porous. AltaGas centrally manages the treasury function for all of its utility subsidiaries and is the sole source of equity; however, WGL issues its own long-term debt. Due to the aforementioned assessment, Fitch will limit the difference between AltaGas and any of its higher-rated regulated subsidiaries to two notches.
WGL
Rate Regulation: WGL derives approximately 80% of its earnings from its Maryland and Virginia jurisdictional service territories. The remaining 20% is from its DC service territory. Fitch believes rate regulation in Maryland and Virginia is generally credit supportive although WGL's recent base rate outcome in Maryland was weak. The adoption of regulatory mechanisms for system betterment and timely recover other costs, providing WGL with a reasonable opportunity to earn its authorized ROE.
Regulation in DC is more challenging, in Fitch's view, compared with Maryland and Virginia. There is no weather normalization in DC, nor does WGL hedge to offset for variations in weather. DC does not have statutory time limit on rate case proceedings, test years are historical by the time decisions are rendered and historically, ROEs have been below national averages, although in the latest rate case they were in-line with the national average for natural gas local distribution companies.
Maryland adopted multiyear rate plans in utility base rate filings, including forward-looking test years. In Fitch's view, these developments underscore an improving regulatory environment in Maryland in recent years. The approval of WGL's 2019 base rate case settlement was indicative of a balanced regulatory environment. However, changes in the governor's office and their impact on the Public Service Commission of Maryland (MPSC) in 2023 has, in Fitch's view, injected a measure of uncertainty regarding the direction of the regulatory compact in Maryland and its potential impact on energy policy and utilities in the state.
Fitch believes concerns regarding the regulatory compact in Maryland are manageable within WGL's current rating category in the near to intermediate term. While not currently anticipated, any meaningful deterioration in jurisdictional price regulation could trigger credit rating downgrades.
Pipe-Replacement Programs: Cost-recovery mechanisms are in place for pipe-replacement programs in Virginia, Maryland and DC. Infrastructure replacement capex designed to enhance system safety and reliability is relatively uncontroversial and a key driver of WGL's utility capex program. Fitch believes these mechanisms to be constructive mitigating regulatory lag and enhancing pipeline system safety and resilience.
DC Rate Case: In April 2022, WGL filed a base rate case with the DC Public Service Commission (DCPSC) requesting rates designed to increase annual revenues USD53 million, which includes a transfer of USD5.3 million previously approved for natural gas system improvements. The rate increase incorporates a 10.4% authorized ROE and a 53.69% equity component of regulatory capital. The DCPSC approved a base rate increase of USD24.7 million in December 2023, reflecting a 9.65% ROE and a 52% equity component of regulatory capital. The decision includes a transfer of $4.7 million from the PROJETpipes surcharge resulting in a net increase of $19.9 million.
Virginia Rate Case: In August 2023, a settlement was filed in WGL's pending distribution base rate case in Virginia, authorizing a USD73 million rate increase based on a 9.65% ROE with an equity component of 52.527%. Prior to the settlement, WGL sought a USD86.6 million rate increase based upon a 10.75% ROE. Fitch believes the settlement, is a constructive development and includes approvals for some of WGL's low carbon efforts amongst other initiatives.
Maryland Rate Case: WGL filed a base rate application in Maryland in May 2023 requesting an incremental USD49.4 million increase in rates based on a 10.75% authorized ROE and an equity component of 52.599%. In December 2023, MPSC issued a final order authorizing gas distribution base rate increase of, which was amended in the 1Q24 to approximately $13 million at a 9.50% ROE (52.60% return on capital), which Fitch considers restrictive.
Stable Financial Profile: Fitch expects WGL's FFO-leverage metrics will average approximately 4.2x over the forecast, improving from 4.7x in 2023 as the rate cases are settled to 4.0x in 2026. Financial metrics remain well below our 4.5x downgrade threshold for the ratings given the diversity of jurisdictions and timely recovery from the pipe-replacement program.
AltaGas is weakly positioned at its 'BBB' rating. With EBITDA of approximately CAD1.3 billion at YE 2023, it is smaller than Emera Incorporated (Emera; BBB/Negative), but larger than Algonquin Power & Utilities Corp. (APUC; BBB/Stable). Emera and APUC had operating EBITDA of approximately CAD2.9 billion and CAD1.0 billion, respectively, at YE 2023. Fitch estimates AltaGas' FFO leverage will average 5.8x during the next three years, comparable with APUC's approximately 7.1x and better than Emera's 7.9x over the same period.
Canadian utility holding company APUC benefits from regulatory diversification but owns utilities that operate in somewhat less constructive regulatory environments, in Fitch's view, with APUC's largest utility operating in Missouri. Fitch expects utility operations to account for approximately 75% of consolidated APUC EBITDA. Emera de-emphasized unregulated investments to focus on utility operations in the U.S., Canada and the Caribbean in recent years.
Fitch believes regulation in Emera's two largest jurisdictions, Florida and Nova Scotia, are balanced. Emera derives roughly 95% of its earnings from regulated operations. AltaGas generates only 55%-60% of its cash flow from regulated utility operations with the remaining coming from partially contracted midstream operations that can be volatile.
Like Emera and APUC, AltaGas's operations include significant low-risk utility operations. AltaGas, through WGL, provides gas utility services to affluent populations in parts of Virginia, Maryland and DC, with prospective customer growth estimated at 1% per year. AltaGas also provides gas distribution service to parts of Michigan. Collectively, AltaGas's U.S. utilities experienced customer growth of 1%, and approximately 70% of their customers are residential. Emera and APUC, unlike AltaGas, have meaningful electric utility operations.
Key Assumptions
Continuation of reasonable economic regulation across AltaGas' jurisdictional service territory;
One percent annual customer growth at AltaGas' U.S. gas utility segment on average;
Additional rate case filings as per management's schedule;
Normalized annual sales at WGL in 2024-2026;
Monetization of MVP in line with management's assumptions and the entire proceeds used towards debt reduction;
Midstream export volumes increasing 5%-10% over the next three years, while increasing the proportion of export volumes from the facility to take-or-pay contracts from merchants;
Capex averages CAD1.3 billion per annum during 2024-2026;
Any additional midstream capex executed in a credit-friendly manner.
AltaGas and WGLH
Factors that Could, Individually or Collectively, Lead to Stabilization of the Outlook
FFO leverage below 6.0x by 2024 and clear line of sight to leverage below 5.5x by 2025; and
A financial policy that is consistent with maintaining FFO leverage below 5.5x on a sustained basis post 2025.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
A rating upgrade is unlikely given AltaGas' FFO leverage and business mix profile. However, an upgrade may result from more credit-supportive regulatory trends at AltaGas' U.S. utility business compared with Fitch's rating case;
Stronger than expected performance at AltaGas' midstream businesses;
Sustained FFO leverage of 4.5x or better on a consistent basis.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
FFO leverage above 6.0x in 2024, and above 5.5x in 2025 and thereafter;
Significant deterioration across AltaGas' jurisdictional service territory;
Additional debt-financed midstream capex resulting in higher leverage;
Failure to raise adequate and timely financing from asset sales or other sources to maintain leverage within Fitch's downgrade thresholds;
Regulated businesses contributing less than 55% of cashflows on a sustained basis.
Additional Sensitivities for WGLH
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
An upgrade at AltaGas would result in an upgrade at WGLH.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
A downgrade of AltaGas would result in a downgrade at WGLH.
WGL
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:
Continued balanced economic regulation across its jurisdictional service territory;
Better than expected rate case outcomes;
Sustained FFO Leverage of 3.5x or better.
Factors that Could, Individually or Collectively, Lead to Stabilization of the Outlook
A revision of AltaGas' Outlook to Stable, given Fitch's maximum allowed two-notch differential between the Long-Term IDRs of the entities.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:
A downgrade to AltaGas' Long-Term IDR, given Fitch's maximum allowed two-notch differential between the Long-Term IDRs of the entities;
Significant deterioration in WGL's currently balanced jurisdictional service territory;
Sustained FFO Leverage of worse than 4.5x;
Unexpected catastrophic events that could result in prolonged outages and/or large third-party liabilities.
Best/Worst Case Rating Scenario
International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.
Liquidity and Debt Structure
Adequate Liquidity: Fitch believes liquidity is adequate at AltaGas and WGL. AltaGas has a revolving credit facility with total borrowing capacity of CAD2.3 billion revolving credit facility which had an availability of 2.26 billion at March 31, 2024. The company had cash and cash equivalents of CAD101 million on its balance sheet as of March 31, 2024. Remaining maturities in 2024 include senior notes totaling CAD550 million.
CAD800 million is due in 2025. WGL's USD450 million credit facility had approximately USD337 million available as of March 31, 2024.
The revolving credit facility expires July 17, 2026. Fitch expects WGL to be cash flow negative in 2024-2026 due to the utility's large capex program, with external funding provided through a balanced mix of equity and debt. Maturities are manageable, with USD294 million maturing over the next five years.
Issuer Profile
AltaGas is a Canada-based energy infrastructure company with operations in the U.S. and Canada with CAD24 billion of total assets. The company has two primary business segments: Utilities and Midstream.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Click here to access Fitch's latest quarterly Global Corporates Macro and Sector Forecasts data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
6
Fitch Rates Northeast Georgia Health System's 2024 Rev Anticipation Certs 'A'; Outlook to Positive
Tue 02 Jul, 2024 - 4:58 pm ET
Fitch Ratings - Chicago - 02 Jul 2024: Fitch Ratings has assigned an 'A' long-term rating to the Hospital Authority of Hall County and the City of Gainesville's approximately $226.3 million 2024 revenue anticipation certificates, issued on behalf of Northeast Georgia Health System (NGHS)
In addition, Fitch has affirmed NGHS's Issuer Default Rating (IDR) at 'A'. Fitch has also affirmed the revenue bonds issued by the Hospital Authority of Hall County and the City of Gainesville (the authority) on behalf of NGHS at 'A'.
The Rating Outlook is revised to Positive from Stable.
RATING ACTIONS
Entity / Debt
Rating
Prior
Northeast Georgia Health System (GA)
LT IDR
A
Affirmed
A
Northeast Georgia Health System (GA) /General Revenues/1 LT
LT
A
Affirmed
A
Page
of 1
VIEW ADDITIONAL RATING DETAILS
The 'A' rating reflects NGHS's leading market position in a growing service area, very strong and consistent operating profitability, and a strong financial assessment. Despite operational pressure stemming from lingering staffing pressures and inflation, NGHS continues to maintain its operating and financial profile, demonstrating credit resiliency.
Proceeds from the 2024 series revenue anticipation certificates will be used to reimburse NGHS for project expenditures associated with the New Tower Expansion Project and pay costs of issuance. The proposed financing includes a six-year serial bond maturing in 2030 and a 10-year serial bond maturing in 2034. The total par amount is expected to be $226.3 million between the two serial bonds.
NGHS is in the process of constructing a multi-story tower expansion project at its Gainesville campus. The New Tower Expansion Project will expand NGHS's surgical capacity and add an additional 192-beds (144 at opening) in February 2025.
The Positive Outlook is based on NGHS' 'Very Strong' operating assessment and 'Strong' financial profile, despite ongoing major capex expansion, which Fitch believes will be maintained during the two-year Outlook period. NGHS's leading market position, robust profitability levels, and solid leverage continue to provide the organization with a strong degree of financial flexibility to absorb any short-term stresses.
SECURITY
Bond payments are secured by a pledge of gross receivables of the obligated group and a leasehold mortgage on certain portions of NGHS's facilities, for so long as the 2017 bonds remain outstanding. The series 2021B and 2017B bonds are backstopped by a seven mill levy pledge from Hall County.
KEY RATING DRIVERS
Revenue Defensibility - bbb
Leading Market Position in Growing Service Area
NGHS maintains a dominant 57% market position in its growing primary service area (PSA) centered around Hall County. It has remained the leading provider in Hall County, while growing inpatient market share in the surrounding counties following investments in Braselton, Barrow and Lumpkin counties in recent years. NGHS's leading market position continue to be supported by its strong brand, well-aligned physician base, and ongoing strategic initiatives. These include a significant expansion at the main Gainesville campus and planned expansion of the Braselton Campus.
NGHS's PSA has exhibited strong population growth rates that exceed both state and national averages. Unemployment rate and income levels remain in line with or better than state and national averages. Overall, NGHS's service area characteristics should translate into a consistent payor mix. Its payor mix remained sound in fiscal 2023 with combined self-pay and Medicaid accounting for approximately 16% of gross revenues.
Operating Risk - aa
Robust Profitability to Continue
Lingering staffing and inflationary pressures continue to affect the rest of the industry, but NGHS's profitability levels are tracking at very strong levels. Fitch believes long-term margins will remain consistent with a 'Very Strong' operating risk assessment. NGHS's operating EBITDA margin was an excellent 14.1% in fiscal 2023 and was 11.9% through six months ending March 31, 2024.
NGHS is deploying and investing in strategic initiatives to reign in rising costs, with a focus on employee recruitment and retention. Initiatives include team-based nursing, education and training, proactive well-being, targeted recruitment and flexible work arrangements. Contract labor continues to trend down as results from initiatives materialize and the system has seen a positive trend in employee engagement and declining turnover rates.
NGHS continues to expand its high acuity services. It offers robotic heart surgery and as the first accredited hernia surgery center of excellence in Georgia draws patients from across the southeast. It was also the eighth hospital in the world to offer histotripsy for liver cancer treatment. Long-term, Fitch believes NGHS's operating EBITDA margin should continue to remain above 10%.
NGHS has a strong track record of reinvestment in its plant, as evidenced by the healthy average age of plant of 12.2 years at FYE 2024. The capital spending ratio averaged 184% over the last five years. With the New Tower Expansion Project targeted for completion in February 2025, NGHS will continue its strategic reinvestment, with projected average annual capital spend of $306 million over the next five years. NGHS has a successful history of successful execution on capex projects.
The New Tower Expansion project will expand surgical capacity, add additional beds, and grow NGHS's signature services, such as heart and vascular, stroke, neurosciences, robotics and trauma. In addition, the Emergency Department (ED) will be replaced, as NGHS maintains one of the busiest ED's in the state. The New Tower Expansion will be complete February 2024. NGHS is concurrently working the phase 1 of the Braselton campus expansion which will open in the summer 2025 and the second phase slated to be completed in late 2026. The Braselton expansion will include 96 new patient beds, increased surgical capacity and emergency room expansion.
Financial Profile - a
Stable Financial Position
NGHS's strong financial profile reflects its good net leverage position in context of its midrange revenue defensibility and strong operating risk assessments.
At FYE 2023, NGHS had approximately $1.5 billion in unrestricted liquidity and approximately $1.2 billion in long term fixed rate debt, with minimal debt equivalents. These translate to a strong 280 days cash on hand, 126% cash to adjusted debt, and a favorably negative 0.8 net adjusted debt-to-adjusted EBITDA (NADAE). Unaudited results as of March 31, 2024 remain consistent with 262 days, 129% cash to adjusted debt, and negative 0.3x NADAE, as unrestricted cash and investments have continued to grow.
In Fitch's forward-looking scenario analysis, NGHS maintains a net leverage position consistent with a strong financial profile assessment despite elevated capex. Fitch's scenario includes revenue and portfolio stresses. Fitch's scenario analysis incorporates the plan of finance and associated capital spending, and also assumes that NGHS maintains strong operating margins, but at a slightly lower level than historical trends reflecting the current labor and inflationary pressures. Net adjusted debt to adjusted EBITDA generally trend at lower levels in the stress case but is acceptable for the current rating.
Asymmetric Additional Risk Considerations
No additional asymmetric risk considerations were factored into this analysis.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Sustained deterioration in operating cash flow levels that results in a midrange operating risk assessment (generally at or below 8% operating EBITDA margins);
Higher than expected capital outlays that result in weaker unrestricted reserves or a large increase in its leverage position with cash to adjusted debt declining below 75%.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Successful completion and stabilization of the New Tower Expansion;
Maintenance of its strong operating profitability levels;
Sustained maintenance of cash-to-adjusted debt above 110%, including the current elevated capital outlays for the tower expansion.
PROFILE
NGHS is headquartered in Gainesville, GA, approximately 53 miles northeast of Atlanta. The system operates a total of 875 acute care beds on two hospital campuses (NGMC - Gainesville and NGMC - Braselton). NGMC - Braselton opened in 2015 and is located approximately 17 miles from NGMC - Gainesville.
Additionally, NGHS acquired Barrow Regional Medical Center, a 56-licensed bed hospital located in Winder, GA, in Jan. 2017, which was renamed NGMC - Barrow and opened NGMC - Lumpkin (52 licensed beds) in July 2019 in Dahlonega, GA, at the former site of Chestatee Regional Hospital. Also included in operations are two employed multispecialty physician groups, a regional preferred provider organization (PPO), a clinically integrated network (CIN), hospice program, and two skilled nursing facilities. Fitch's analysis is based on consolidated financial statements. In fiscal 2023, NGHS reported total operating revenues of $2.2 billion.
Sources of Information
In addition to the sources of information identified in Fitch's applicable criteria specified below, this action was informed by data from Lumesis.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
ESG Considerations
The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores.
Additional information is available on www.fitchratings.com
ALTAGAS LTD. 
