Bond rating agency withdraws LADWP's 'AA-' rating

A major bond rating agency says it will reassess its bond rating of the Los Angeles Department of Water and Power, possibly leading to a rating downgrade and making it more expensive for the public utility to borrow money.

Mayor Antonio Villaraigosa said Monday that Fitch Ratings announced that it would reevaluate the DWP's bond rating, following the City Council vote rejecting electricity rate hikes last week.

Fitch Ratings said it withdrew its initial "AA-" rating for two DWP bonds worth $720 million because it assumed the rate increase would be approved.

Councilwoman Jan Perry says such an assumption was "irresponsible," because the council had to review the increase.

Villaraigosa says the proposed rate increases would have protected the DWP's credit rating.

Copyright 2010 The Associated Press.