Physical climate risks mounting for U.S. utilities, according to S&P

Using an analysis of Trucost's Climate Change Physical Risk data, Standard & Poor’s found wildfires, storms and water stress are the most material climate hazards facing 24 S&P-rated investor-owned U.S. utilities in the next 30 years. By contrast, U.S. utilities tend to be less exposed to the climate hazards related to periods of cold weather.

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The risks of acute, extreme weather events are rising. Five of the country's worst natural disasters have occurred since 2005, totaling $523 billion in inflation-adjusted damage. While in most cases, acute risks prove manageable and are supported by recovery mechanisms to allow utilities to recuperate related costs, extreme events do have an effect on credit quality, according to the ratings agency. In particular, transmission lines for utilities on the West Coast present a concentrated risk given extensive wildfire exposure. Indeed, about 19 percent of utilities' transmis