More planning, fewer incentives, and a black swan on the horizon.
The transmission superhighway still needs major investments. Rate incentives were working -- until FERC started backing away from them. FERC should assert its authority more aggressively to promote the vision of a robust interstate grid.
Utilities face rate pressure as financing costs hit rock bottom.
Fortnightly’s annual rate case survey is designed to give readers a look at rates of return on equity (ROE) awarded in state-level retail base rate proceedings for electric and natural gas utility companies. An examination of the reasoning and commentary contained in these orders provides a glimpse into economic factors considered by regulators as they seek to balance the interests of investors and consumers when authorizing utility ROEs.
How customer satisfaction drives returns on equity for regulated electric utilities.
Data and experience show that serving customers well translates into better rate case outcomes. Conversely, poor performance starts a downward slide. J.D. Power and Associates research shows the correlation between customer service and financial returns.
Utilities are enjoying some of the best financing terms anybody’s ever seen. Is the party winding down?
Conditions are ideal for utility financing—but not forever. Although interest rates remain low, policy changes weigh on capital structures.
How fixed income investors view the utility sector.
Bond investors are keen for signs of a legitimate recovery, and will be looking to move into holdco bonds.
A challenging year brings a change in the rankings.
(September 2012) Our annual financial ranking shows some remarkable shifts among the industry’s shareholder value leaders. Despite flat demand and low commodity prices, investor-owned utilities are investing heavily in capital assets. Investment discipline and operational excellence distinguish leaders on the path to financial performance.
Positioning to win in the contest for scale.
By Jack Azagury, Walt Shill, and Ted Walker
The industry’s slow-and-steady pace of mergers seems to be picking up speed, as larger and well-positioned players overtake smaller and weaker targets. Realizing the greatest value from consolidation requires companies to assess their strengths and weaknesses and focus on performance improvement—both before and after a deal gets done.
Second thoughts on transmission’s golden egg.
The electric utility industry offers up a wealth of ideas on how the Federal Energy Regulatory Commission might reform its policy, adopted under FERC Order 679 in 2006, of granting financial incentives for investments in transmission line projects that ensure reliability or mitigate line congestion so as to reduce the cost of delivered power. Fortnightly’s Bruce W. Radford reports.
(September 2011) Our annual ranking tracks the publicly traded electric and gas companies that produce the greatest value for shareholders. Despite the year’s topsy-turvy financial markets, perennial performers like DPL, PPL and Exelon return to the top of the list. Others face looming cap-ex burdens as regulators impose new mandates and requirements. Leading companies are positioning for growth, despite a challenging landscape.
Business models are evolving to suit a shifting industry landscape.
Andre Begosso, Jack Azagury and Tim Porter
The next decade will bring serious disruption to the utility industry. But with cooperation from regulators and legislators, utility companies will be able to shift their business models to capture significant value—both in existing businesses and emerging ones.