Moody's Investors Service has today lowered by one notch the senior secured rating of United Energy Distribution Pty Limited ("UED") from Baa1 to Baa2. In a separate rating action, Moody's also lowered by one notch the ratings of DBNGP Finance Co Pty Ltd ("DBNGP") and Energy Partnership (Gas) Pty Ltd ("EPG") from Baa2 to Baa3.

Outlook on all three ratings is stable.

Moody's has previously stated that UED and EPG had maintained weak financial profiles at their previous rating levels. Prior to today's rating action, the rating outlook on the entities was negative, reflecting these concerns.

"On a long term basis, we believe that total debt level that exceeds the Regulated Asset Base ("RAB") is not consistent with an investment grade rating level, says Spencer Ng, a Moody's Analyst, adding "such a gearing level raises constraints in handling unforeseen changes in the regulatory regime, as well as limiting an issuer's flexibility in managing elevated funding costs".

On the other hand, the downgrade of DBNGP's rating reflects the lack of cushion in its credit metrics at its previous Baa2 rating level. The previous rating had been on negative outlook reflecting similar concerns. The weakened credit profile of certain customers has also been a driver for lowering the rating.

The ratings of United energy, Energy Partnership and DBNGP continue to reflect investment grade features as highlighted by their low business risk, which supports their stable and predictable cashflow. The ratings also favourably consider the transparent regulatory framework in which the companies operate.

The rating of EPG could experience upward trend if there is evidence of a consistent improvement in the company's financial profile, including a sustained de-leveraging trend, as shown by Total Debt / RAB falling below 85% and FFO/Total Interest improving to 1.8x or above. On the other hand, downward pressure would emerge if FFO/Total Interest falls below 1.4 times and Total Debt/RAB remains above 100% on a consistent basis.

UED's Baa2 rating could experience upward trend if there is evidence of consistent improvement in its gearing level -- as measured by Total Debt to RAB trending towards 80%-85%, while maintaining its FFO/Total interest coverage at no less than 2.3-2.5x. On the other hand, downward pressure could emerge if Total Debt/RAB remains above 100% over time.

The rating of DBNGP could experience upward trend if 1) the Stage 5B expansion is completed on time and within budget, and 2) there is a consistent improvement in its financial position, leading to the ratio of FFO/Total Interest increasing to around 1.8-1.9x, and FFO/Total Debt rising above 8-10%. On the other hand, the rating could be downgraded if the financial profile deteriorates, as reflected in FFO/Total Interest dropping below 1.4x, and FFO/Total Debt declining below 4% on a consistent basis. A material deterioration in the credit quality of key customers could also pressure the rating.

The last rating action with respect to EPG was taken on 11 May 2009, when the company's Baa2 underlying rating was affirmed and the outlook has been revised to negative from stable.

The last rating action taken with respect to UED was on 4 May 2009 when Moody's affirmed the company's Baa1 underlying rating with a negative outlook.

The last rating action with respect to DBNGP Finance was taken on 17 March 2009, when the company's Baa2 underlying rating was affirmed and the outlook has been revised to negative from stable.

The principal methodology used in rating these issuers were the Regulated Electric and Gas Networks methodology, published in August 2009, and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Energy Partnership (Gas) Pty Ltd's major activity is gas distribution in Victoria, Australia. The company is 79.9% owned by DUET. DUET is an ASX100 utility fund listed on the Australian Stock Exchange.

United Energy Distribution's major activity is electricity distribution in Victoria, Australia. The company is 66% owned by DUET. DUET is an ASX100 utility fund listed on the Australian Stock Exchange.

DBNGP Finance -- based in Perth, Western Australia -- is the financing vehicle for DBNGP Trust, which owns the Dampier to Bunbury Natural Gas Pipeline. The project is the main pipeline connecting demand centers in the south-west of Western Australia with gas fields in the Carnarvon Basin. It has a track record of transmitting steady volumes, reflecting the established demand profiles of its industrial, commercial and residential customers.