DEADLINE: Friday, Sept. 30, 5:00 p.m. Eastern time

Fortnightly has opened the nominations process for this year’s Top Utility Lawyers honors.

You’ll find the nomination form here …
And the FAQ document here …
And last year’s Top Lawyers article here.

Nominations are invited from executives at utility and energy companies, regulatory agencies, and trade associations serving the U.S. electric and gas industries. Eligible nominees include attorneys at law firms and private practices, as well as in-house counsel. Nominations from law firms, self-nominations, and intra-company nominations are considered on an informational basis only and will not be counted as votes.

Thanks for your nominations!

Posted: September 26th, 2011 under energy policy, finance, regulation.
Comments: none

Sept. 15, 2011

FOR IMMEDIATE RELEASE

Contact:
Michael Burr

burr@pur.com

320-632-5342
Public Utilities Reports, Inc.

Vienna, Va.: For three years running, Ohio-based utility DPL Inc. has delivered the best overall shareholder performance of any U.S. investor-owned utility company, according to a closely watched report published in the September issue of Public Utilities Fortnightly magazine.

The 7th-annual Fortnightly 40 Report (http://bit.ly/2011F40), sponsored by Accenture, ranked the four-year shareholder value performance of U.S. investor-owned utilities and merchant power companies. The C Three Group of Atlanta, which along with Public Utilities Fortnightly developed the F40 financial model, analyzed the annual reports of 82 power and gas companies to compare a series of shareholder-value metrics — such as profit margin, dividend yield, return on equity, return on assets and sustainable growth.

DPL, parent company of Dayton Power & Light, has held the #1 spot in the Fortnightly 40 report since 2009. DPL’s performance is distinguished by industry-leading returns on equity and assets, as well as strong free cash flow and profit margins. DPL’s perennial strength typifies the top ranks of the F40, according to Michael T. Burr, Fortnightly’s Editor-in-Chief. “Only two names changed in the top 10 ranks. Mirant exited as a result of its merger with RRI Energy, and Questar ascended to #3 by virtue of an asset spin-off,” Burr said. “F40 leaders have shown remarkable stability in performance for shareholders.”

Other movers in the F40 rankings include CLECO, Piedmont Natural Gas, and DTE Energy. DTE’s performance was strengthened by a 10-year program of cost control and operational improvements. In an interview for the report, DTE CFO David Meador told Fortnightly, “Technology deployed right will reduce costs and improve customer service.”

Rankings fell for gas pipeline company EQT and wholesale generator NRG. “EQT was weighed down by heavy spending on shale-gas development, while NRG’s rank was affected by its comparatively low returns on equity and assets,” Burr said.

Companies included in the 2011 F40 ranking include: AES, AGL Resources, Allegheny Energy, Alliant, AEP, Centerpoint, Chesapeake Utilities, CLECO, Delta Natural Gas, Dominion, DPL, DTE, Edison International, El Paso Electric, Energen, Entergy, EQT, Exelon, FirstEnergy, Gas Natural, Laclede, MGE, National Fuel Gas, NextEra, Nicor, Northwest Natural Gas, NRG, NStar, OGE, Piedmont Natural Gas, PPL, PSEG, Questar, RGC Resources, Sempra, South Jersey Industries, Southern Company, Southern Union, TECO, UGI, and WGL Holdings.

The 2011 Fortnightly 40 Report is available to subscribers at www.Fortnightly.com or http://bit.ly/2011F40. Trial subscriptions are available, allowing immediate access to the report.
# # #
PUBLIC UTILITIES FORTNIGHTLY (www.fortnightly.com), published by Public Utilities Reports Inc., in Vienna, Va., is the journal of record for the U.S. utility industry, providing authoritative, in-depth analysis of trends in generation, transmission and distribution of electricity and natural gas. For more than 80 years, Fortnightly has delivered expert analysis to help utility-industry executives and regulators decide where to invest, how the industry will be regulated and what the future holds. Subscription rate: $287/year.

Posted: September 15th, 2011 under M&A, Uncategorized, finance, regulation, utility stocks.
Comments: none

PUC grants higher cost-recovery rate for lower total than requested

Update courtesy of Utility Regulatory News #4028: The Maine Public Utilities Commission, while acknowledging that an electric utility had shown that it was entitled to a higher stranded cost recovery rate, has declined to authorize the full increase sought by the company, asserting that the utility, Bangor Hydro-Electric Co. (BHE), had greatly overstated the remaining life of the stranded assets at issue.

Under Maine’s electric restructuring law, electric utilities are able to recover from ratepayers the utilities’ investment in facilities and property that were “stranded” by virtue of the plant divestiture requirements of the restructuring program. For BHE, its stranded cost rates are subject to review and reconciliation every three years. In its latest filing, BHE requested an increase in its stranded cost rates of more than 26%, predicated on a return on equity (ROE) of 8.5% and a weighted average cost of capital (WACC) of 10.31% for its stranded cost rate base. According to the utility, such figures were based in part on an 18-year remaining life for the subject assets. The commission, however, declared the 18-year remaining life proposal clearly excessive, noting that BHE’s stranded costs will be 98% amortized by March 1, 2018. Consequently, the commission ruled that a remaining life of just nine years would better reflect actual amortization schedules. Looking at that shorter remaining life, and incorporating actual, current interest rates, the commission concluded that BHE should be allowed a WACC of 9.38% and a ROE of 7.35%, with the utility instructed to revise its stranded cost rates to incorporate those lower WACC and ROE values. For the full story, subscribe to URN.

Posted: August 25th, 2011 under finance, regulation.
Comments: none

PSC Approves Investment Recovery Bonds

Update courtesy of Utility Regulatory News #4030: The Louisiana Public Service Commission has authorized an electric utility, Entergy Louisiana, LLC (ELL), to use securitization financing as a means of recovering monies it had invested in a now-abandoned generation plant repowering project.

The project involved the Little Gypsy generating station located in St. Charles Parish. Originally constructed as a natural gas-fired unit, ELL had planned to convert the plant from gas to a solid fuel mix of petroleum coke and/or coal. Although the repowering project had an estimated price tag of $1.26 billion, the commission nevertheless deemed it to be a prudent investment at the time initially proposed. Over time, however, as air quality standards and emissions limits became more stringent, ELL revisited its Little Gypsy strategy. It suspended all construction work in March 2008 and formally announced cancellation of the project in October 2009. Because the utility had proceeded with the work with the commission’s blessing, the commission deemed it reasonable for ELL to be able to recoup both monies already sunk into the project and expenses incurred in cancelling the project.

The commission noted that the state legislature had enacted special financing legislation to address just such situations. Under that law, a utility may request authority to issue “investment recovery bonds,” with its ratepayers being required to cover both the principal and interest on the bonds through a non-bypassable investment recovery charge to be added to customer bills. In ELL’s case, the commission approved an issuance of more than $205 million. For the full story, subscribe to URN.

Posted: August 25th, 2011 under finance, generation.
Comments: none

Finds stagnant economy necessitates more austerity moves

Update courtesy of Utility Regulatory News #4027: Although agreeing that the economy, both nationally and locally, seems to be showing signs of recovery, the New York Public Service Commission has declared the pace of improvement to be slow enough to make it imprudent to rely on a utility’s credit rating alone as a primary indicator of an appropriate rate of return on equity (ROE) for the utility. Commission staff had advocated reliance on a theory of negative correlation between an entity’s credit rating and its required ROE.

In the instant case, involving Orange & Rockland Utilities (O&R), commission staff had argued that because the company has maintained a higher credit rating compared to similar utilities, it needed a lower ROE, of no more than 9%. The commission, however, found that while it is logical to assume a direct connection between risk and return, the use of credit ratings as a measure of such risk was unwise. It noted that in today’s continually underperforming economy, bondholders and equity investors appear to view risk quite differently, making the credit rating benchmark an unreliable gauge of risk expectations. The commission found that ongoing economic struggles also impacted O&R’s operating expenses.

While not discounting the steps the utility has already taken to cut its costs wherever possible, in accord with prior austerity directives from the commission, the commission determined that further reductions must be identified. Deeming it appropriate for the utility to share in the economic straits of its customers, the commission instructed O&R to provide for close to another $500,000 in austerity savings. For the full story, subscribe to URN.

Posted: July 13th, 2011 under finance, regulation.
Comments: none