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Fortnightly Magazine - December 2004

Changing Capital Structures for Changing Times

The utilities industry is in need of more equity.

Value Line projects that total capital for electric utilities will increase about 12 percent during the next several years, while common equity will increase nearly 28 percent. Similarly, natural gas distribution company total capital is projected to increase about 10 percent, and common equity close to 15 percent. For both industries, the median common equity ratio in the near-term future for companies with investment-grade rated subsidiaries is in the range of 51 to 52 percent. For utilities, higher equity ratios are desirable for several reasons.
Byline: 

Robert G. Rosenberg

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Backed By Wind

The need for additional generation to compensate for wind variations is disappearing.

Utility-based studies have laid to rest the concern that a wind plant needs to be backed up with an equal amount of dispatchable generation. Even at moderate penetrations, ancillary services to back up new wind power need not be more than is required of a system as a whole.
Byline: 

Ron L. Lehr

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Regulatory Roundup

2004 FERC roundup: Path 15 Upgrade; Gas Bypass Pipeline; Power Line Communications; Gen Station Power Needs; ISO Retail Service; Renewable Energy Portfolios; Gas Supply Risk; Fuel Cost Hedging; Utility Supply Solicitations; Provider of Last Resort; Coal Seam Gas; Deceptive Marketing Practices; Renewable Portfolio Standards.
Byline: 

Bruce Radford

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Utility Business Risk: A Reference

Business Versus Financial Risk: Debt is thought to be less risky than equity because debt holders have priority over equity holders as to: (1) distribution of assets in the case of dissolution of the company; and (2) distribution of earnings in the case of everyday operations.
Byline: 

Robert G. Rosenberg

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