The government has proposed merging the state-owned hydro, nuclear and thermal power utilities – Hidroelectrica, Nuclearelectrica and Termoelectrica, respectively – plus three distribution companies.

While noting that the merged energy group could have a more beneficial, diversified generation mix and vertical integration, S&P said hydro’s lower operational risk would be outweighed by those of the thermal and nuclear generation assets.

The agency said the merger plan was at a preliminary stage and has kept its ratings steady on Hidroelectrica. Recently, it lifted its corporate rating on the utility given its low cost asset base plus improving demand and market conditions. S&P had cautioned against any sell-off of hydro power plants as they were core to the improved outlook for the utility.

Last week, the Ministry of Economy and Finance said there would be increased investment in the energy sector, including in hydro power.