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Credit ratings agencies downgrade nuclear power company TVO

Standard & Poor's credit rating service has once again lowered its corporate credit rating of the Finnish nuclear power firm TVO. The service nevertheless assessed the firm’s future outlook as stable. Fitch Rating affirmed its lower medium grade for TVO one week earlier, but revised its outlook from stable to negative.

Olkiluoto 3.
Olkiluoto 3 is now seven years behind schedule. Image: Hannu Huovila / TVO

One of the big three credit ratings agencies operating on the world stage, Standard & Poor's, has lowered the credit rating of the Finnish firm Teollisuuden Voima Oyj (TVO) from BBB-/A-3 to BB+/B.

The nuclear power company is owned by a consortium of power and industrial companies in Finland, the largest shareholders being the energy firms Pohjolan Voima and Fortum.

Despite this change in creditworthiness, S&P still assessed the nuclear power company’s outlook as stable. According to Standard & Poor's, the downgrade of TVO's credit rating reflects weakening cost competitiveness due to the deterioration in Finnish power prices and future price expectations. This may weaken the cost competitiveness the company offers its shareholders, particularly once the third plant unit is finally commissioned, the ratings agency argues.

On May 18, another of the big three, Fitch Ratings, affirmed its previous assessment of a BBB rating for TVO, but revised its outlook from stable to negative. According to Fitch Ratings, the outlook revision reflects the weakened mid-term outlook for wholesale electricity prices.

More than 45 years of nuclear power

Founded in 1969, TVO currently operates two nuclear plant units on the southwest coast of Finland, Olkiluoto 1 and Olkiluoto 2, producing a net output of 880 MW and providing nearly one-sixth of the electricity consumed in Finland.

Construction of a third TVO plant unit, Olkiluoto 3, has been plagued with problems from the start and is now seven years behind schedule. TVO has several pending disputes with the unit’s suppliers. In 2012, TVO submitted a claim and defence to the International Chamber of Commerce for damages due to delays.

TVO now predicts the third unit will be taken into commission sometime in 2018 or 2019. On April 14 the company submitted an application for the unit’s operating license to the Finnish government, and expects that it will be granted in late 2017. 

In July 2010 the Finnish Parliament ratified a decision-in-principle from the government concerning TVO's application to construct a fourth plant unit, Olkiluoto 4. In September 2014, the government however rejected TVO’s application to have the validity of the decision-in-principle extended.

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