About 30 states have begun (em
either through the legislature, the utility commission, informal working groups, or some combination of these (em to consider issues such as retail wheeling,...
Inc.: "PacifiCorp is well positioned competitively as one of the largest utilities in the West, with excess low-cost generating capacity [hydro] that can be sold into other states."
Despite the pitfalls ahead for electric utilities, such as the potential loss of industrial customers, many analysts say industry fundamentals are sound and earnings should improve in 1995. Edward J. Tirello, Jr., analyst with NatWest Securities Corp., predicts an average growth rate of 2.3 percent for 1995, based on normal weather and savings from cost-cutting measures. Tirello sees the consolidation trend continuing. He also expects companies to continue lowering their dividend payout ratios from the current industry average of 80 percent to a more optimum 65 percent. But most will try to do it through earnings growth and not more dividend cuts, he says.
Wall Street's fears over retail wheeling have subsided somewhat since last year's California "earthquake," and it is not seen as an immediate threat
to earnings, notes Dan P. Rudakas, analyst with
Kemper Securities Inc. He believes the current environment of austerity and a reluctance to seek rate relief will result in lower earnings growth than in a less competitive market. "But we do not see severe, abrupt losses of business for most of the companies," Rudakas adds. t
W. Lynn Garner is senior writer of PUBLIC UTILITIES
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