March 06, 2013 08:00 ET
Outlook for Electric Utilities Industry
The ShinesRooms.com Provides Stock Research on Wisconsin Energy Corp. and Dominion Resources Inc.
NEW YORK, NY--(Marketwire - Mar 6, 2013) - Increasing capital spending, new regulations and unusually warm winter put pressure on electric utilities in 2012. Another major trend in the electric utilities industry has been the ongoing shift to natural gas from coal for power generation, driven by a sharp decline in natural gas prices. Electric utilities such as Wisconsin Energy Corporation (
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In 2012, natural gas prices fell sharply, thanks to the shale revolution in the U.S. The sharp decline led to increasing use of natural gas for power generation. In fact, for a while last year, power generation from natural gas equaled that from coal. If natural gas prices remain low, electric utilities may continue to shift from coal to natural gas. Also, natural gas is cleaner, which will help the industry comply with environmental regulations.
Meanwhile, electric utilities are also looking at renewable in order to diversify. Earlier this month, Dominion Resources Inc. announced that it acquired a solar energy development project in the state of Georgia from Smart Energy Capital and Jacoby Development. The project is expected to start commercial operation later this year.
Thomas F. Farrell II, Chairman, President and CEO of Dominion Resources Inc., said that the addition of the solar project to the company's generation portfolio is consistent with its philosophy, which recognizes that affordable and reliable electric supply depends on a proper balance of all types of generation; nuclear, clean coal, biomass, natural gas, hydro-power, wind and solar.
Electric utilities faced an unusually warm winter in 2012, which had a negative impact on financial performance. The industry will be hoping for a return to a normal winter this year.
Back in January 2013, Wisconsin Energy Corporation reported strong fourth quarter financial results. The company's revenue for the fourth quarter was $1.07 billion, compared to $1.11 billion reported for the same period in the previous year. Revenue for the full year stood at $4.25 billion, compared to $4.49 billion reported in 2011.
Gale Klappa, Chairman, President and CEO of Wisconsin Energy Corporation, said that overall, sales to the company's large commercial and industrial customers came in better than forecasted. Klappa further said that based on customer input, the company had expected a decline in sales, however, as the year progressed, it saw strength in several sectors.
Conversely, Dominion Resources Inc. provided robust guidance for first quarter of 2013 a couple months back. The company expects first quarter operating earnings to be between $0.80 per share and $0.85 per share. For 2013, the company expects operating earnings to between $3.20 per share and $3.50 per share.
Operating earnings for the year ended December 31, 2012 were $3.05 per share.
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