Utilities

UK may swap one utilities dogma for another

15 May 2019

If elected, opposition Labour leader Jeremy Corbyn could nationalise water and energy networks below market value. Crudely ditching privatisation for state ownership carries legal and reputational risks. Better to lower the returns that regulators allow these companies to make.

Swiss do their bit for energy resource nationalism

5 Apr 2019

France’s EDF is selling its quarter-stake in fellow utility Alpiq for $489 million. That helps existing Swiss investors take the group private. But it also fits with a wider trend where European states are happier with vital infrastructure being held by domestic owners.

RWE’s German carve-up looks better than E.ON’s

14 Mar 2019

A year after a 17 bln euro asset swap, the German utilities’ deal is in Brussels’ antitrust sights. It’s more an issue for E.ON, which may lose out if forced disposals erode hoped-for cost savings. RWE, meanwhile, seems to have chosen the right time to bulk up in renewables.

EDP overhaul makes Chinese bid look extra stingy

12 Mar 2019

The Portuguese utility will sell assets to cut debt and invest in renewables. It looks like a balancing act between the demands of activist Elliott, and Portugal’s government. But the potential boost to EDP’s value bolsters the case for rejecting an offer from China Three Gorges.

Engie demystifies before activists come calling

28 Feb 2019

The French gas and power group is decluttering its complex structure by exiting 20 markets. Engie’s state ownership and Belgian nuclear albatross act as a brake on activism, but won’t always save it if its undervaluation lingers. Still, steps to close the gap with big wind and solar peers suggest a capacity for self-help.

Centrica starts to radiate bid target status

21 Feb 2019

The UK’s biggest energy supplier slumped after warning of a hit from a state price cap. Centrica is a random mix of retail customers, nuclear, gas and new tech. But its halving in value since 2017 offers a way for utility wannabes like oil majors to quickly bulk up.

South African power bailout puts consumers on hook

20 Feb 2019

A $4.9 bln government lifeline is the bare minimum needed to keep indebted utility Eskom afloat. Likely union resistance to mass layoffs means consumers will have to swallow higher electricity costs. President Cyril Ramaphosa can only hope hikes are delayed beyond a May election.

PG&E governance brownout calls for a jump start

14 Feb 2019

The troubled California utility wants to replace half its board, but shareholder BlueMountain proposes a full reset. A complete overhaul is rarely wise, but in PG&E’s case it could be helpful. The catch is, looming bankruptcy means the activist fund may not be the best advocate.

Elliott kicks China’s EDP bid when it’s down

14 Feb 2019

The activist investor objected to China Three Gorges’ offer for the Portuguese utility. The deal was struggling, and Elliott’s plan, to invest in renewables, isn’t controversial. But the Chinese group’s large shareholding could still be a problem for Paul Singer’s fund.

Viewsroom: Why did PG&E file for bankruptcy?

31 Jan 2019

The California utility may face up to $30 bln in wildfire costs. But shareholders see value and lenders were willing to stump up cash. The board’s desire to cut other expenses may have driven the decision. Plus: How U.S. charges against Huawei may affect the telco industry.

PG&E takes pre-emptive bankruptcy to a new level

29 Jan 2019

The California utility has filed, despite having a $20 bln surplus of assets over liabilities, offers of finance, and one less big wildfire to worry about. The company hasn’t yet made a persuasive case for choosing a process that will surely be lengthy, expensive and distracting.

BlueMountain is tardy with PG&E activism

24 Jan 2019

The hedge fund firm wants to oust the California utility’s directors, who are heading toward bankruptcy. It has a point: The hit from wildfires is not yet defined, and PG&E has stumbled in other ways. But BlueMountain is running out of time to rouse bigger, longer-term owners.

PG&E takes one for the California wildfire team

14 Jan 2019

The utility is readying a bankruptcy filing, facing $30 bln of fire-related liabilities partly thanks to the Golden State’s questionable legal norms. Poor planning, including inadequate insurance, was its own fault. But state and other government actors have also fallen short.

SSE comes off worse in energy M&A short-circuit

17 Dec 2018

The UK energy group’s plan to merge its retail unit with that of Germany’s Innogy collapsed, after a price cap undermined the transaction’s logic. Innogy can still do a deal with new owner E.ON. SSE’s transition to renewables looks murkier, and its generous payout more fragile.

Eskom creditors may yet share South Africa’s pain

17 Dec 2018

Plans to fix a $30 bln debt crisis at the state power group hurt everybody but bondholders. Besides a state bailout and tariff hikes, the utility wants to cut a third of its wage bill. Union pressure and weak government finances mean private lenders could have to take a loss too.

South African blackouts mask $30 bln power problem

6 Dec 2018

State giant Eskom is rationing electricity supplies while seeking debt relief from the government. Big staff cuts would shrink losses and help assuage nervous bond investors. That will be tough for President Cyril Ramaphosa, but may be the only way to keep the lights on.

PG&E woes show climate is clear and present danger

14 Nov 2018

The California utility may be to blame for the wildfire that’s claimed 48 lives. Its value has halved and it may run out of cash. The planet’s warming is already worsening fires, floods, and water scarcity. Yet most investors and companies still treat it as a longer-term risk.

U.S. utilities face decades of perfect storms

17 Sep 2018

Carolina power companies grapple with hurricane damage while a Massachusetts gas firm is reeling from explosions. California’s push for green energy could hurt credit. Even after decades of rising investment, power companies will struggle to strengthen and modernize networks.

Hot summers are least of UK utilities’ problems

12 Sep 2018

SSE’s shares dipped after high temperatures and gas prices forced a profit warning. A cap on tariffs for retail customers will hit the sector further. And all energy companies have to work out how to cope with the falling cost of renewables and competition from new entrants.

Thames Water’s nationalisation barrier has a leak

3 Sep 2018

The utility is reining in dividends and spending 12 bln pounds to restore ropey infrastructure. Given a Labour government under current opposition leader Jeremy Corbyn might nationalise the sector, caution is wise. But Thames’ inability to cut bills still leaves it an outlier.