The D.C. suburb of National Harbor saw a lot of action this week as exhibitors and attendees of Autovation descended upon the Gaylord National to discuss the automated side of the utility equation.
Autovation is run by Utilimetrics, an association with the goal of bringing together “diverse stakeholders of electricity, water and gas distribution utilities to promote and share best practices for smart grid/smart metering, communications, utility automation and data management.”
Autovation is now in its 24th year and, this week, it offered a bevy of options from breakfast with utility peers to big picture sessions on today’s hottest power topics.
A couple of utilities opened and closed the week. Pepco Holdings revealed how they are taking a look at new technologies and transmission projects, even chatting up the smart grid, in the opening session. Commonwealth Edison (ComEd) closed the show painting a picture of the perfect smart energy home, which could include smart meters, demand response options, energy efficient appliances and other “killer applications” of smart grid technology.
And smart tech did end up in interesting spots at the show. While AMI and communications have always been an Autovation staple---and is now a smart grid one as well and should be, given the need for those items---electric vehicles (EVs) got their own series of sessions this year at the show, a whole track, even. Topics ranged from managing the distribution system impacts to identification of utility and customer issues with EVs. (Last year, Deloitte predicted that EVs and other alternative fuel/green would be a third of global sales by 2020. J.D. Powers, on the other hand specifically hailed EVs at a whopping 3.5 percent by 2015. Whichever prediction wins, EVs have certainly garnered a lot of conference attention this week.)
My favorite Autovation session, by far, featured Portland General Electric (PGE) insiders Eric Spack and Steve Sprague who revealed how the utility is using new meter tech to not just examine revenue protection but to bust pot growers in the area who are stealing a whole lot of power. The packed session was treated to some fabulous shots of home nurseries found and local news reports on PGE’s work. (And how often do you get to hear a speaker admit that his favorite part of the presentation is the marijuana part that will come later? Not too often, and it got some good chuckles.)
In other Autovation news, Hydro One and San Diego Gas and Electric were award winners at the show this year. Hydro One received the 2011 Excellence in Project Management Award for its smart meter deployment in Ontario. These days, almost all of Hydro One’s customers have smart meters and over a million have switched to time-of-use pricing. San Diego Gas and Electric won the 2011 Consumer Outreach Award for the utility’s smart metering program and its communications plan to keep the consumer in the loop.
In the downtime between sessions and awards, breakfasts and receptions, attendees could visit the Autovation show floor which featured both industry staples like Elster, Aclara and Itron and niche companies like Mad Dash and Ecologic Analytics.
Communications and open standards provider SmartSynch announced a major contract at the show. Michigan’s Consumers Energy has chosen the company to provide the metering system for the utility’s modernization program, to the tune of 1.8 million electric customers.
“As we develop our program, it will allow us to offer new options to customers and allow them to use our system to integrate new technology---such as smart appliances and plug-in electric vehicles---into their daily lives,” Consumers Energy President and CEO John Russell said in a release about the SmartSynch partnership.
Those EVs were just popping up everywhere at Autovation, I swear.
Next year’s Autovation is scheduled for Sept. 30-Oct. 2 in the hometown of the Queen Mary, Long Beach, California.
Thursday, September 29, 2011
Wednesday, September 21, 2011
Utilities contribute backbone and Benjamins to the economy
We talk a lot about utilities being the backbone of our economy, since electricity is the maker of the modern world. (You can't go through a single business transaction these days that doesn’t rely on electricity in some way, from powering lights and computers at the local bank to massive Wall Street stock transfers.) But, utilities are also a very profitable business by themselves, contributing to the economy in both backbone and Benjamins. Run correctly, utlities bring in cash and rising share prices for stakeholders.
(In case you're not up on the urban slang: Benjamins started as a slang term for $100 bills, since Ben Franklin is on the $100 bill. It's now grown into a general slang term for all large amounts of dollars and cents.)
So, let’s take a look at some of the dollar-and-cents power news this week.
Barrons is so happy with Southern Company that they’ve downgraded the utility’s shares. No, really. Not kidding. It seems that the cash gurus always thought Southern was an A-number one investment in this sector, but now the prices of Southern shares have popped up to reflect their goodness. So, it’s not a steal anymore. That being said, Barrons shifted their rating for Southern to Above Average from Buy.
In other cash and power hot spots on the web, Motley Fool is labeling National Grid a “cash king.” (They define their “cash king margin” as cash flow divided by sales, with that number topping 10 percent.) According to Motley Fool’s calculations, National Grid is at 13.2 percent (up a couple of percentage points from last year and up 10 from three years ago). American Electric Power (AEP) took second in their overview at 7.8 percent. Like National Grid, AEP showed “significant growth” from last year.
The other two utilities reviewed for potential “cash king” status by Motley Fool didn’t do quite as well as AEP and National Grid. Exelon came in at 0.8 percent, down over 10 percentage points from last year, and Duke Energy was in negative numbers, even more negative that last year’s but less negative than five years ago.
Investment website Seeking Alpha labeled utilities “boring,” but noted that they are a good buy since utilities represent a stable foundation for any investment portfolio. (In bad economic times, even investors look for less risk and less crazy. It may mean slower returns, but it’s not a rollercoaster ride that could end in one long drop.)
Seeking Alpha wasn’t looking for Motley Fool’s “cash king.” Instead, they examined the net profit margin. For those of us not watching our investments like hawks, a net profit margin is a formula figuring a company’s profit per dollar generated.
Looking at a net profit margin above that coveted 10 percent---like Motley Fool’s “cash king”---Seeking Alpha suggested ten good utility purchases that they labeled “cheap” but with “strong profitability.” These included DPL Incorporated, which sells electricity in West Central Ohio; Wisconsin Energy; CPFL Energy in Brazil; El Paso Electric; and Duke Energy, among others. (Editor’s note: If you’re interested in the power markets and distribution options in Brazil like CPFL Energy, check into the new DistribuTECH Brasil conference at this link.)
So, Duke didn’t make “cash king,” but it did get the thumbs up on net profit margin.
And, speaking of Duke and money, the Duke-Progress Energy merger that could make the combined company a monopoly of sorts in the Carolinas is still jumping regulatory hoops and hearings. The hearings were opened to the public this week with customers fearing high rates to support the combined entities' profits.
Duke and Progress, however, believe the merger is necessary to spread higher rates over a wider consumer base, since the companies see a whole lot of generation spending coming.
“In order to meet future demand for electricity, both companies will have to invest in new generation that will be more costly than the companies' current embedded costs," said Duke CEO Jim Rogers and Progress CEO Bill Johnson in a prepared statement at the hearing’s opening.
Over at the Wall Street Transcript, Ali Agha, managing director in the equity research department of SunTrust Robinson Humphrey gave some tidbits from the recent “Alternative Energy and Utilities Report.”
Agha recommends AES and AEP. Agha sees AES accelerating in 2011 through 2012 in the area of earnings growth. He stated that AES may hit $1.70 in earnings by 2015.
Agha likes AEP because it’s cheap. Like Barron’s once saw Southern, Agha views AEP as a sweet deal, trading below value.
Utilities remain sound business sense for many shell-shocked investors. And, according to the experts, some are still trading on the “cheap and sweet” deal level. As utilities---and the rest of the economy---continue to recover, the bargin prices may disappear, but the value won’t. It's hard to argue with an investment that brings you both comfort and profit.
(In case you're not up on the urban slang: Benjamins started as a slang term for $100 bills, since Ben Franklin is on the $100 bill. It's now grown into a general slang term for all large amounts of dollars and cents.)
So, let’s take a look at some of the dollar-and-cents power news this week.
Barrons is so happy with Southern Company that they’ve downgraded the utility’s shares. No, really. Not kidding. It seems that the cash gurus always thought Southern was an A-number one investment in this sector, but now the prices of Southern shares have popped up to reflect their goodness. So, it’s not a steal anymore. That being said, Barrons shifted their rating for Southern to Above Average from Buy.
In other cash and power hot spots on the web, Motley Fool is labeling National Grid a “cash king.” (They define their “cash king margin” as cash flow divided by sales, with that number topping 10 percent.) According to Motley Fool’s calculations, National Grid is at 13.2 percent (up a couple of percentage points from last year and up 10 from three years ago). American Electric Power (AEP) took second in their overview at 7.8 percent. Like National Grid, AEP showed “significant growth” from last year.
The other two utilities reviewed for potential “cash king” status by Motley Fool didn’t do quite as well as AEP and National Grid. Exelon came in at 0.8 percent, down over 10 percentage points from last year, and Duke Energy was in negative numbers, even more negative that last year’s but less negative than five years ago.
Investment website Seeking Alpha labeled utilities “boring,” but noted that they are a good buy since utilities represent a stable foundation for any investment portfolio. (In bad economic times, even investors look for less risk and less crazy. It may mean slower returns, but it’s not a rollercoaster ride that could end in one long drop.)
Seeking Alpha wasn’t looking for Motley Fool’s “cash king.” Instead, they examined the net profit margin. For those of us not watching our investments like hawks, a net profit margin is a formula figuring a company’s profit per dollar generated.
Looking at a net profit margin above that coveted 10 percent---like Motley Fool’s “cash king”---Seeking Alpha suggested ten good utility purchases that they labeled “cheap” but with “strong profitability.” These included DPL Incorporated, which sells electricity in West Central Ohio; Wisconsin Energy; CPFL Energy in Brazil; El Paso Electric; and Duke Energy, among others. (Editor’s note: If you’re interested in the power markets and distribution options in Brazil like CPFL Energy, check into the new DistribuTECH Brasil conference at this link.)
So, Duke didn’t make “cash king,” but it did get the thumbs up on net profit margin.
And, speaking of Duke and money, the Duke-Progress Energy merger that could make the combined company a monopoly of sorts in the Carolinas is still jumping regulatory hoops and hearings. The hearings were opened to the public this week with customers fearing high rates to support the combined entities' profits.
Duke and Progress, however, believe the merger is necessary to spread higher rates over a wider consumer base, since the companies see a whole lot of generation spending coming.
“In order to meet future demand for electricity, both companies will have to invest in new generation that will be more costly than the companies' current embedded costs," said Duke CEO Jim Rogers and Progress CEO Bill Johnson in a prepared statement at the hearing’s opening.
Over at the Wall Street Transcript, Ali Agha, managing director in the equity research department of SunTrust Robinson Humphrey gave some tidbits from the recent “Alternative Energy and Utilities Report.”
Agha recommends AES and AEP. Agha sees AES accelerating in 2011 through 2012 in the area of earnings growth. He stated that AES may hit $1.70 in earnings by 2015.
Agha likes AEP because it’s cheap. Like Barron’s once saw Southern, Agha views AEP as a sweet deal, trading below value.
Utilities remain sound business sense for many shell-shocked investors. And, according to the experts, some are still trading on the “cheap and sweet” deal level. As utilities---and the rest of the economy---continue to recover, the bargin prices may disappear, but the value won’t. It's hard to argue with an investment that brings you both comfort and profit.
Thursday, September 15, 2011
China out Wal-Marts the Waltons and Solyndra collapses
Last week, the FBI raided the California offices of thin-film solar maker Solyndra, once a poster child for the new energy movement that was to bring green jobs across the country in a giant wave of momentous change.
But, that was 2008. Now it’s 2011, and the momentous green wave didn’t happen here. That wave never reached our shores. Instead, that wave is stuck inside the country outline of China.
It fizzled out at the borders.
Here’s the deal: The Chinese are sharp. They see the potential in the green market for massive future energy needs. They’re also unified and interconnected in ways we individual Americans are not. So, being a communist country and an industrial powerhouse, they pulled the ultimate Wal-Mart: They stole the market share.
How’s that done? Well, for a lot of years Wal-Mart was the king of this philosophy, some would say. (Honestly, though, they aren't the only ones to use a strong arm to rule a market.) Here’s the basic concept: Go into a small market, undercut prices by taking a loss that can be balanced nicely across your wide network, force the mostly small and mostly independent competition out of business when they cannot meet your low, low prices competitively, and then become the sole player in the game---which lets you set prices any way you’d like from that point forward. Now, Wal-Mart may quibble with this characterization, but it’s a view of “market hogging,” if you will, that’s always followed them as they expanded. They have a bad reputation for running smaller companies out of town on a rail with those low, low price guarantees. And, factually, smaller manufacturers, suppliers and retailers can't get the big group deals that Wal-Mart can. They're leveraging their size.
Now, think of China as government Wal-Mart, a state-run powerhouse capable of taking a large financial hit up front and more than willing to leverage its size. So, they develop huge state subsidies in order to flip a switch on green manufacturing. Instantly, everyone’s up and running, pushing a product out that’s cheaper because they’re not having to carry the burden of production costs or start-up money at this point. (They’re the runner who jumps the gun with the blessings of the establishment.)
Now, American green companies have gotten some help from stimulus cash, but nothing like the funnel of dough the Chinese have contributed. The Chinese help is overwhelming, full and even overreaching. Americans, on the other hand, are putting together guaranteed government loans, some venture capital, some cash from friends and family, their maxed out credit cards---they’re struggling for a product they believe in. But, the emphasis in on struggling here. And it’s a heavy emphasis indeed.
So, as the FBI sorts through the lost belongings and paperwork of Solyndra---where the Walton family ranks as venture capital investors, actually---there will be a lot of speculation about whether the government did enough due diligence in choosing Solyndra for that suddenly very unpopular green loan.
But, perhaps that’s the wrong question. Perhaps, instead, we should ask if the government really invested enough given how quickly China was able to flip the green game to its favor.
But, that was 2008. Now it’s 2011, and the momentous green wave didn’t happen here. That wave never reached our shores. Instead, that wave is stuck inside the country outline of China.
It fizzled out at the borders.
Here’s the deal: The Chinese are sharp. They see the potential in the green market for massive future energy needs. They’re also unified and interconnected in ways we individual Americans are not. So, being a communist country and an industrial powerhouse, they pulled the ultimate Wal-Mart: They stole the market share.
How’s that done? Well, for a lot of years Wal-Mart was the king of this philosophy, some would say. (Honestly, though, they aren't the only ones to use a strong arm to rule a market.) Here’s the basic concept: Go into a small market, undercut prices by taking a loss that can be balanced nicely across your wide network, force the mostly small and mostly independent competition out of business when they cannot meet your low, low prices competitively, and then become the sole player in the game---which lets you set prices any way you’d like from that point forward. Now, Wal-Mart may quibble with this characterization, but it’s a view of “market hogging,” if you will, that’s always followed them as they expanded. They have a bad reputation for running smaller companies out of town on a rail with those low, low price guarantees. And, factually, smaller manufacturers, suppliers and retailers can't get the big group deals that Wal-Mart can. They're leveraging their size.
Now, think of China as government Wal-Mart, a state-run powerhouse capable of taking a large financial hit up front and more than willing to leverage its size. So, they develop huge state subsidies in order to flip a switch on green manufacturing. Instantly, everyone’s up and running, pushing a product out that’s cheaper because they’re not having to carry the burden of production costs or start-up money at this point. (They’re the runner who jumps the gun with the blessings of the establishment.)
Now, American green companies have gotten some help from stimulus cash, but nothing like the funnel of dough the Chinese have contributed. The Chinese help is overwhelming, full and even overreaching. Americans, on the other hand, are putting together guaranteed government loans, some venture capital, some cash from friends and family, their maxed out credit cards---they’re struggling for a product they believe in. But, the emphasis in on struggling here. And it’s a heavy emphasis indeed.
So, as the FBI sorts through the lost belongings and paperwork of Solyndra---where the Walton family ranks as venture capital investors, actually---there will be a lot of speculation about whether the government did enough due diligence in choosing Solyndra for that suddenly very unpopular green loan.
But, perhaps that’s the wrong question. Perhaps, instead, we should ask if the government really invested enough given how quickly China was able to flip the green game to its favor.
Wednesday, September 7, 2011
AEP Ohio case finds settlement amid controversy
On Sept. 7, AEP Ohio called it quits---not in offering power but in a series of cases pending before the Public Utilities Commission of Ohio (PUCO). In the end, the final settlement gives AEP the OK to merge Columbus Southern Power (CSP) and Ohio Power (OPCo) into a single unit.
There are other issues laid to rest as well, including a mandate to transition to a competitive generation market by 2015.
AEP Ohio seems pretty happy with the outcome, but not everyone in Ohio is thrilled.
On the happy side of things: AEP Ohio, of course.
"After a decade of legislative and regulatory changes to Ohio's market for electricity, this agreement allows an appropriate transition to a fully competitive electricity generation environment for AEP in the state," said Nicholas Akins, AEP president, in a written statement. "With the clarity this agreement provides, AEP is adopting a new Ohio business model that transforms the company into two entities---a regulated energy delivery system and a separate generation business. It also advances key state policies while sustaining investment in Ohio."
And the agreement was signed by a lot of stakeholders---20 or so organizations that AEP Ohio dubbed as “representing a broad range of customers.”
Among the biggest features of the agreement: a timeline for that open market move that has AEP supplying capacity to retail at a discount for three years, a fund to bolster economic efforts and a continuation of the company’s low-income fund, and an option for customers to choose renewable sources.
According to AEP, in 2012, typical CSP customer bills will decrease a bit (about $4) while typical Ohio Power bills will increase a bit (about $4). But, right now, it’s not the customers who are doing the complaining about this deal, it’s retail provider FirstEnergy Solutions.
They sent out a release in response to the deal that claimed customers would “be forced” to fork over a billion above competitive price values.
"The settlement filed today is no better for customers than AEP's initial plan which was overwhelmingly opposed by consumer and business groups," said Donald R. Schneider, President of FirstEnergy Solutions in another written statement. "With this settlement, customers will be denied the benefits of low prices from the competitive market and be illegally burdened with high electric prices for years to come---all to benefit AEP shareholders at the expense of customers. The plan also unfairly favors large industrial customers by providing them with cheaper electric rates at the expense of residential and low-income customers."
Details on how that billion breaks down or number supporting the claim that the settlement favors industrial customers at the expense of others were not provided in the release, although it is fairly common for all power companies to cut higher end/heavier use customers, like commercial and industrial users, a break.
As with any deal ever made, it seems this one has winners and hecklers. Since this settlement is a compromise, it seems to fit the very definition of it---that nobody is totally happy.
There are other issues laid to rest as well, including a mandate to transition to a competitive generation market by 2015.
AEP Ohio seems pretty happy with the outcome, but not everyone in Ohio is thrilled.
On the happy side of things: AEP Ohio, of course.
"After a decade of legislative and regulatory changes to Ohio's market for electricity, this agreement allows an appropriate transition to a fully competitive electricity generation environment for AEP in the state," said Nicholas Akins, AEP president, in a written statement. "With the clarity this agreement provides, AEP is adopting a new Ohio business model that transforms the company into two entities---a regulated energy delivery system and a separate generation business. It also advances key state policies while sustaining investment in Ohio."
And the agreement was signed by a lot of stakeholders---20 or so organizations that AEP Ohio dubbed as “representing a broad range of customers.”
Among the biggest features of the agreement: a timeline for that open market move that has AEP supplying capacity to retail at a discount for three years, a fund to bolster economic efforts and a continuation of the company’s low-income fund, and an option for customers to choose renewable sources.
According to AEP, in 2012, typical CSP customer bills will decrease a bit (about $4) while typical Ohio Power bills will increase a bit (about $4). But, right now, it’s not the customers who are doing the complaining about this deal, it’s retail provider FirstEnergy Solutions.
They sent out a release in response to the deal that claimed customers would “be forced” to fork over a billion above competitive price values.
"The settlement filed today is no better for customers than AEP's initial plan which was overwhelmingly opposed by consumer and business groups," said Donald R. Schneider, President of FirstEnergy Solutions in another written statement. "With this settlement, customers will be denied the benefits of low prices from the competitive market and be illegally burdened with high electric prices for years to come---all to benefit AEP shareholders at the expense of customers. The plan also unfairly favors large industrial customers by providing them with cheaper electric rates at the expense of residential and low-income customers."
Details on how that billion breaks down or number supporting the claim that the settlement favors industrial customers at the expense of others were not provided in the release, although it is fairly common for all power companies to cut higher end/heavier use customers, like commercial and industrial users, a break.
As with any deal ever made, it seems this one has winners and hecklers. Since this settlement is a compromise, it seems to fit the very definition of it---that nobody is totally happy.
Subscribe to:
Posts (Atom)
