PPL

The Fortnightly 40 Best Energy Companies

A challenging year brings a change in the rankings.

(September 2012) Our annual financial ranking shows some remarkable shifts among the industry’s shareholder value leaders. Despite flat demand and low commodity prices, investor-owned utilities are investing heavily in capital assets. Investment discipline and operational excellence distinguish leaders on the path to financial performance.

Transactions (June 2012)

Northeast Utilities closes Nstar acquisition; NextEra announces $600 million stock offering; PPL acquires AES power plants; plus debt and equity deals totaling $513 million.

The Importance of Being Sustainable

Doing the right thing can drive utility stock performance.

Utilities get little credit for their efforts to strengthen the sustainability of their businesses. But these efforts have paid dividends in stock performance, capital costs, regulatory relationships, and brand value. Capturing the greatest value for shareholders will require utilities to become better understood as socially responsible enterprises.

Opportunities for the Brave

Navigating the power and gas markets.

The power and gas markets look very different today from what we were anticipating three to four years ago. Gas has gone from seeming shortage to seeming abundance with recent spot prices falling to well under $3/mcf. Power prices and volatility are down significantly. Demand is soft and excess capacity exists in most of the country. While it might be easy to attribute the conditions in the power markets largely to the recession, the reality is that the fundamentals of the market are materially changing—creating opportunities while revealing new pitfalls.

People (May 2012)

Lewis “Lew” Hay III intends to retire from NextEra Energy at the end of 2013 as part of a planned leadership succession process. Hay will serve as executive chairman from July 1, 2012, until his retirement, and James L. Robo, currently president and CEO of NextEra Energy, will succeed Hay as CEO, effective July 1.

Storm Clouds Forming

The coming cash flow and dividend stress at America’s electric utilities.

Government policies and the industry’s response has increased the risk factors affecting the quality of earnings at U.S. electric utilities. Deferred taxes and ballooning pension obligations portend leaner operating cash flow in the years ahead. Regulators and utilities will be forced to unwind these financial knots in future rate cases.

People (January 2012)

American Electric names new vice presidents; Northeast Utilities announces executive changes; Southern Nuclear and Peabody Energy name new vice presidents; plus senior staff changes at IDACORP, Georgia Power, Conservation Services Group, and others.

Capacity Value Trap

Are merchant power assets overpriced?

By some measures, merchant power assets look like a bargain, selling for well below their replacement cost. But whether low prices signal a buying opportunity or a value trap depends on the outlook for electricity demand growth—not just in the long term, but also in the fairly immediate future.

Transmission Tug-of-War

From EPAct to Order 1000, siting authority continues evolving.

Six years after Congress granted FERC “backstop” siting authority for electric transmission projects in the Energy Policy Act of 2005, the regulatory landscape is still evolving as a result of federal court decisions and new FERC orders. But despite a lack of certainty at the federal level, project sponsors have filed numerous applications at the state level for new transmission projects. Can these projects proceed without greater certainty at FERC?

Interesting Times

Utilities stay the course in a volatile market.

A wave of mergers and acquisitions is moving through the industry, as utilities and financial players position for growth and strategic advantage. Will economic and regulatory forces continue supporting these transactions? Our annual finance special report examines trends in capital markets and M&A deals involving utilities, power generators and gas suppliers.