NRG

Do Utility Mergers Deliver?

Not in all cases, or for all stakeholders. Here’s why.

The industry perceives substantial benefits from consolidating. But what is the track record? Does the regulatory and strategic landscape suggest these mergers are beneficial?

Power Plant Sales: Valuing Optionality

Market risks and volatilities are driving asset values higher.

About 10 percent of the power-generating capacity in the United States has changed hands in the past three years. How buyers factor the variables and predict the future will distinguish winners from losers in the evolving power-generation industry.

Smackdown! Round Three - The Bankruptcy Court vs. FERC

The jurisdictional battle over authorizing rejection of wholesale power contracts continues.

The high stakes turf battle over whether FERC or the federal bankruptcy courts have jurisdiction over rejecting wholesale power contracts is now in its third round. Round one was fought in 2003 in the NRG bankruptcy case and ended in a settlement among the parties. Round two followed with the Mirant Chapter 11 case. Now punches and counterpunches are flying in round three: the Calpine bankruptcy.

People

New Opportunities: Southern Nuclear Operating Co. announced that its board of directors elected Joseph (Buzz) Miller as senior vice president of nuclear development. Miller is currently the vice president of government relations for Southern Co.

The Top Utility Stocks

A review of total shareholder returns shows how growth and merger strategies drove performance last year.

To better understand the performance of the electric utility sector from both a short-term and long-term perspective, we examined the total shareholder return (TSR)—dividends plus change in stock price—of 58 electric companies for 2005 and for three- and five-year periods. We grouped these companies into four categories to better understand the impact of alternative strategies on investor performance: Recovering, Traditionalist, Growth, and Merger.

A Constellation Of Risks

Will the deal with FPL serve the best interests of ratepayers? 

Even as many hope that repeal of the Public Utility Holding Company Act (PUHCA) will lead to more efficient and rational corporate structures, they also fear that repeal could foster irrational exuberance, with mergers that fail spectacularly. Maybe that explains why every new utility merger announcement is being met with a much higher level of scrutiny than in past decades.

What Is Your Power Portfolio Really Worth?

Change is the only certainty in today’s market.

The past year has allowed the North American power sector to continue its recovery, but it has been a treacherous time for investing. Asset values, and the value of their associated debt instruments, are being driven in the short term by an extreme fuel market and in the long term by a back-to-basics mindset among electric utilities. Still, asset valuations in most markets are not yet at replacement costs, leaving current investors with a residual level of risk.

People

(August 2005) President Bush nominated Joseph Kelliher to chairman of the Federal Energy Regulatory Commission. Xcel Energy named Richard C. (Dick) Kelly CEO. And others...

Merchant Power: Ratepayers Back At Risk

A review of power plant deals in 2004 shows that utilities are buying.

Whether evolution or devolution, the merchant deals done to date show movement to a familiar structure; ratepayers are back at risk. While ratepayers have benefitted from merchant plants, they also paid since competition began with PURPA in 1978, and many of the acquisitions put them at risk for future changes in power values and fuel costs.