In the wake of the banking crisis, utilities lead the way to financial stability.
The back-to-basics trend positioned utilities and other energy companies to lead the way out of Wall Street’s mess. Despite a perfect storm of rising costs and a weakening economy, utilities and lawmakers might start a wave of investments in clean-energy assets and technology. But will Wall Street be ready to finance it?
Allowance trading needs oversight, but don’t overdo it.
As Congress mulls omnibus climate-change legislation, questions are arising about the potential for greenhouse gas emissions markets to be manipulated. Current legislation attempts to address the problem, but only a streamlined oversight regime can hope to prevent emissions-trading abuses.
Eye-popping nuclear costs portend rising leverage.
(July 2008) When Progress Energy announced in March 2008 that the expected cost had tripled for its proposed two-unit, 2,200-MW nuclear plant in Levy County, Fla., the company called on the state’s highest-ranking proponent of nuclear energy to blunt negative reaction to the news.
New gas projects help globalize the U.S. market.
Underground storage allows gas users and traders to hedge against price volatility. Building more capacity will help North America fully integrate into global gas markets.
Before the hearings started, I felt the number of critical cyber assets for a medium size utility would be on the order of several thousand, not 20 as some major utilities are identifying under the CIP standards. This should be a red flag for the industry.
The old paradigm—a strong inverse correlation of high interest rates and lower utility valuations—once again takes hold.
The recent breakout of the benchmark 10-Year Treasury yield from the recent mid-4 percent yield band to approximately 5 percent (with some market expectation that it may increase further) potentially has important strategic and value implications for the power and utility industry.
The total hedge-fund universe currently approaches $1.1 trillion, about 5 percent of which is dedicated exclusively to energy. These numbers for energy hedge funds are likely to grow at unprecedented rates. How can your company benefit?
“Mysterium tremendum et fascinans”: The Latin phrase, coined by German theologian Rudolf Otto, which characterizes humans as being overwhelmed and fascinated by experiences that are totally different from ordinary life.1
The Geopolitical Risks of LNG
To many energy-industry analysts, 2005 is a make-or-break year for the U.S. gas market. If we don't have at least several liquefied natural gas (LNG) terminals in construction by the end of the year, the country arguably will face serious gas-supply shortages and price spikes beginning in about 2008.1
At a posh dinner event and conference, industry experts speculate on the issues that could affect the industry in 2005.
Buying Time
Slowly and cautiously, utilities are moving back into growth mode.
The air is buzzing with talk of mergers and acquisitions (M&A). It can be heard in the boardroom and on the trading floor. Bankers hear it, and they see their deal backlog beginning to grow. Fund managers hear it, as they hunt for the best buys in the market before strategic investors snatch them up. Financial advisers and lawyers hear it, too; their phones are ringing more than they have in years.