Transmission is Bubbling

A billion-dollar ‘gold rush’ could send grid rates through the roof.

Money may be difficult to come by for Wall Street financiers in these dark days, but apparently not for electric transmission construction—at least so far. A rash of recent orders from FERC shows that generous financial incentives remain available to companies seeking to expand the nation’s grid capacity.

Letters to the Editor

(October 2008) The information in your Online ROE Database is very helpful and important for a state agency such as ours, which has very limited resources for the purchase of research information. May we have permission to cite and create exhibits from your online database of gas and electric authorized returns on equity and associated data?

Diminishing Returns

Authorized ROEs shrink over time.

(September 2008) This year’s Fortnightly 40 survey showed that while F40 companies have grown their average return on equity (ROE) in the past three years, those returns have grown slowly compared to some other measures—including appreciation in share prices.

The Fortnightly 40

(September 2008) Shareholder value remains strong as the Big Build begins. Our fourth annual ranking shows healthy growth in earnings and share prices. But as capital spending grows, dividends are shrinking and equity returns are weakening. Regulatory relationships will separate future winners from losers.

Post-Meltdown Valuation

Credit-quality concerns join fuel and market factors to affect power-plant valuation

Lenders know there are billions of dollars of weak financial assets in the market, such as securities backed by bad mortgages. The problem is no one knows who is exposed at what level to those weak financial assets. This causes a lack of confidence in the lending industry, and a credit crunch that — if unabated — could cause a recession.

Texas Ring Fence

TXU’s buyout structure creates a potential model for utility M&A and refinancing deals

2007 was a big year for TXU Corp., as it went private in the largest leveraged buyout in history. To sweeten the deal for environmentalists and regulators, TXU made structural and financial concessions. Now TXU’s ring-fencing structure might become a template for future utility M&A and refinancing deals.

Annual ROE Survey: Capitalizing On Grid Concerns

Regulators use rate cases to craft incentives for capital spending.

(November 2007) Fortnightly's annual rate-case analysis reveals a new trend at state PUCs involving return-on-equity rate allowances. Regulators increasingly are giving utilities an earnings incentive to pursue preferred investments.

Iatan 2: A New Coal Model

KCP&L breaks ground on a novel structure for billion-dollar plant investments.

To the casual observer, the Iatan 2 power plant under construction in Platte County. Mo., is simply another coal-fired facility. However, when viewed by a utility executive facing seemingly non-stop global-warming headlines and news broadcasts, the 850 MW Iatan 2 looks more like a new regulatory and business model for building coal burners.

Banking on the Big Build

The need for many hundreds of billions of dollars in capital expenditures creates huge opportunities and challenges, especially in a more challenging credit environment.

An estimated $900 billion of direct infrastructure investment will be required by electric utilities over the next 15 years, and $750 million already is in place. Nukes, renewables, low-carbon technologies, combined-cycle gas turbines—all have faced cost challenges. The magnitude of the numbers requires a multi-pronged approach.

Understanding the F40

How does the modified Dupont Model reward utilities?

(September 2007) The impact of dividend policies, capital expenditures, and publicly traded equities highlights an in-depth look at what goes into the modified Dupont Model behind the Fortnightly 40 financial rankings for utilities.