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Fortnightly Magazine - October 15 2003

Painted Into a Corner

Wall Street wants utilities to return to basics, but the CEOs worry it won't be enough.

One can certainly understand why so many utility chiefs steered their companies back to basics over the past two years. But a key problem remains. As the economy improves, utilities recognize they must soon return to the front lines and face the music. How do they generate enough growth to keep investors from being lured away by higher-yielding financial instruments — all while remaining to appear as stable, low-risk investments?
Byline: 

Richard Stavros

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People

People for October 15, 2003.

New positions at Great Plains Energy Inc., Wisconsin Energy Corp., Independent Energy Producers of Maine, and others.
Byline: 

PUF

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What Does Shakespeare Know About Utility Leadership?

New realities demand new direction from utilities.

To paraphrase Shakespeare, "The true soul of joy is in the process." For the utility industry, nothing could be further from the truth. The deregulatory "process" has not been joyful. It has been painful and costly.
Byline: 

Timothy F. Sutherland and Gary Vicinus

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Corporate Governance: Embracing Sarbanes-Oxley

By approaching Sarbanes-Oxley compliance as an opportunity rather than a burden, companies can reap strategic rewards and become stronger.

The stakes have risen in the compliance game. A series of incendiary scandals-followed by the Sarbanes-Oxley Act and its implementing regulations-have focused the scorching light of public scrutiny onto public companies in all industries, and the heat is particularly intense for investor-owned utilities.
Byline: 

Michael T. Burr

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Utility Ratemaking & ROE: Rethinking the Tools of the Trade

The industry requires new analytical tools to incorporate the realities of today's higher risk operating and investment environment into the equity allowance process.

With a “return to basics” mantra now common in the industry, coupled with the recognition of under-investment and heightened reliability concerns, most companies are now facing significant capital expenditure programs. Many utilities are considering or have filed for rate relief.
Byline: 

Mark Ciolek, Wallace Jones, and Dr. William Wilson

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The Finance Forum: Growth in a Back-to-Basics World

Financial experts discuss the ongoing recovery in the power industry, and whether better times will live up to investor expectations.

Chief financial officers from Southern Co., FPL, TXU, and Northeast Utilities, and the chief executive officer of Aquila discuss their corporate growth strategies in the context of a more conservative utility environment, and an improvement in the economy.
Byline: 

Richard Stavros

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21st Century ROEs: What Is Reasonable?

How to benchmark return on equity (ROE) and depreciation expense in utility rate cases.

Opposing estimates of investors’ required rates of return and determining appropriate depreciation rates could translate into disagreements worth tens of millions of dollars in a utility’s annual revenue requirement.
Byline: 

Johannes P. Pfeifenberger and Mark W. Jenkins

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The Dividend Bust?

A close look at the effect of the dividend tax cut reveals a disappointing investor reaction.

Utilities have been thought of as income stocks, providing among the highest levels of dividend payout in the U.S. economy. Therefore, in theory, utility investors would have much to gain from a substantial dividend tax reduction. But utility investors have not responded as one might have expected.
Byline: 

Robert G. Rosenberg

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Energy Technology: Winner Take All

A review of which technologies and companies stand to win and lose as a result of the 2003 blackout.

After the blackout, the electric industry once again finds itself at a crossroads, confronting it with three basic choices. The authors observe which technologies and companies will win and lose as a result.
Byline: 

E. Kyle Datta and Dan Gabaldon

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The Smart Grid

Has the Aug. 14 blackout finally made it more than a pipe dream?

While debate continues about the causes of the Northeast blackout, there’s no arguing that the majority of transmission and distribution in this country is controlled via mechanical technology largely developed in the 1950s.
Byline: 

Jennifer Alvey

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