Price caps, secondary markets, and the revolution in natural-gas portfolio management.
When FERC decided in February, in Order 890, to lift the price cap for electric-transmission customers seeking to resell their grid capacity rights in the secondary market, it cautioned against expecting a quid pro quo for gas. Was the commission just teasing?
Several new LNG plants are under construction, but firm supplies remain scarce. Will empty terminals alleviate gas-price pressures?
To better understand the evolving outlook for LNG and its role in the U.S. gas market, Fortnightly assembled a group of LNG specialists with various perspectives on the issues.
KKR’s leveraged buyout of TXU might be the first of many private-equity M&A deals, but traditional utility mergers also will increase.
Utility mergers and acquisitions took a turn when private-equity firms Kohlberg Kravis Roberts and Texas Pacific Group bid for TXU. Experts from Morgan Stanley, Lazard, and JP Morgan describe the M&A universe.
Lackluster interest in Duke post spin-off bodes ill for the “pure play” electric utility.
It was the most anticipated energy deal in the New Year, but not for the usual reasons. The spin-off of Duke Energy’s natural-gas business into a stand-alone company, Spectra Energy Inc., peaked interest because the transaction was to have marked the vindication of the so-called “pure play” electric strategy. The deal also has captured attention because the spin-off represented a divestiture strategy that until now hasn’t been universally embraced, with gas assets still seen by some utilities as part of core operations.
An analysis of current valuation trends explains why some assets command better values than most.
Average North America power-plant asset value is at $725/kW.1 Compared with our winter 2005-2006 analysis, this figure has barely changed; however, we have seen significant value movements based on region, fuel, and asset types.
Utilities place billion-dollar bets on infrastructure, but the deck may be stacked against them.
Something seems deeply disturbing about the utility industry these days. An almost palpable tension rises whenever the utility CEO is asked how he will build enough power plants to meet the skyrocketing demand for power. Some consultants predict that sometime after this decade the time will come when utilities won’t be able to build enough to meet demand, no matter what they try.
Mixed signals leave developers wary of building new infrastructure.
FERC Chairman Joseph Kelliher gives mixed signals that leave developers wary of committing to investments in new infrastructure, given his clear desire to affect positive change, while appearing to argue for policy decisions that are politically safe but arguably inconsistent.
As rate disallowances become more commonplace and capital requirements expand, infrastructure development will come with a higher price tag.
As the industry’s regulatory risks and capital requirements expand, financing will come with a higher price tag—and another cost pressure in the ratemaking process.
A rash of rate hikes around the country could have utilities facing a public-relations disaster.
Constellation Energy CEO Mayo Shattuck has complained that he and the utility have unfairly been demonized in the public and in the press. In one interview with a Maryland paper, Shattuck showed distress over the verbal abuse his executives had received from angry ratepayers. And who can blame him?
It seems history does repeat itself all too often. In the late1990s, a common complaint by utility CEOs was that utility price-to-earnings (P/E) multiples did not take into account whether a com- pany was a pure-play regulated utility, a diversified utility with a merchant subsidiary, or something else. Many say investors at the time just didn’t understand the different business models that were emerging after electric restructuring.