No share buy back, no increased dividend, credit ratings cut .... and they are still only in the damage assessment phase. There are still many weeks before any serious reparations can be made to the infrastructure and getting power back to paying customers. Hey I know utility companies are big, diverse, powerful and have basic monopolies on their geographic area, but you don't come out of a natural disaster unscathed, especially the worst storm in US history making a direct hit on your customer base.
Here is an excerpt:
Citigroup on Wednesday trimmed its 2005 earnings estimate for Entergy to $4.55 from $4.60. The firm said it had expected the company to raise its dividend 20 percent and announce a share buyback plan this October, moves that now could be delayed as Entergy spends money on recovery.
"Storm restoration costs are hard to estimate at this point, but we believe they could run into the hundreds of millions of dollars," analyst Greg Gordon said in a note. "Last year, FPL's ... utility subsidiary had storm costs of about $1 billion after a severe hurricane season."
Standard & Poor's say it may cut Entergy's credit ratings because of the damage from Katrina. The company is currently rated "BBB," two steps above junk status.
"The economic restoration of New Orleans and the surrounding communities is clearly going to be a painful and prolonged process, which may permanently weaken Entergy's credit quality," S&P said. "
Not to worry.
This event will help to set the stage for the elimination of the pensions for many Entergy employees.
Yep...the employees will be reduced to mere contractor types with no benefits and they'll be told that they should consider themselves lucky to be there.
All the damage is in the regulated side of the business. They will get back all they put in for the restoration and then some. I agree that they will use this as an excuse to further erode employee benefits. Wayne probably did a fly by of the damage area to justify a jaunt to the Carib. Then again, he doesnot have to justify that sort of thing anymore.
Regardless for which political party you are for, it can't be overstated how our current president has absolutely failed in every possible way in dealing with the tragedy. It was so kind of him to end his vacation short while people are going hungry in one/two of the states that got him elected. How come we can do an overnite mass drop of food to people in Iraq but we can't do something similar to help out our own countrymen and women? Unlike 911 when there was little or no warning, with Katrina he had at least 2 days to prepare and did nothing!!!!!!!!!! With the garbage he has puilled over the last 5 years and now this perioed of absolute lack of leadership, I urge congress to pressure him to resign.
"Power is always a big concern in the wake of a hurricane. One of Florida's major utilities, FPL Group (FPL:NYSE) , moved from $32.50 to $42.50 in the year following the 2004 hurricanes. Utilities suffer damage to towers and transmission lines initially, but that's covered by insurance, and ultimately they tend to get post-disaster rate hikes from regulators, boosting earnings much farther out.
The biggest electric utility in New Orleans is Entergy (ETR:NYSE) . It pays a dividend yielding 2.8%, and even though it's trading near an all-time high, it may still be a decent value. The energy-savvy brokerage Jefferies put out an interesting report on the efficiency of the company's nuclear power plants last week, upgrading its opinion to buy from hold. Jefferies found that a sum-of-the-parts valuation put the utility's fair value at $87.50 in 12 months, which would be a 16% gain from here, including the dividend."
"The problem for these companies, though, is that storm costs can often take months or more to recover. Florida officials just last month granted a request from FPL's Florida Power & Light Co. for 2004 hurricane damage recovery.
Of the company's $1 billion in storm losses, only about half were covered by reserves or insurance, leaving the company at the mercy of regulators to get the rest from customers through monthly surcharges.
Of a $533 million deficit in the storm reserve, Florida allowed recovery of $442 million.
But state utility regulators can be expected to approve temporary storm cost recovery for utilities instead of permanent rate increases, said Jon Cartwright, an energy debt analyst at BOSC Inc.
"With any luck, grid operations may be restarting within four weeks -- but that's a big question mark. They need people on the ground to do the assessments first," he said.
"Ultimately, it's in everyone's best interest to get the grid up and running and to keep the companies whole."
Entergy shares are off about 3 percent since the start of the week, while FPL is down less than 0.2 percent and Southern is actually up about 0.7 percent."
Still going down!
According to your older article, the Jefferies upgrade was last week .... before the worst storm in US history. Taking in consideration that this storm is more severe and costly than the previous years storms in Florida and it that it was a direct hit to ETR's major customer base, analyst are now talking differently. Oh and by the way, their natural gas lines are found to be severely damaged as well.
Today's News Release:
WASHINGTON (MarketWatch) - Hurricane damage sustained by Entergy Corp.'s power system and the economic affects of the storm on the Gulf region could negatively affect the company's credit rating, Standard & Poor's Ratings Services said Wednesday
The ratings agency placed the energy holding company's BBB corporate credit rating on credit watch with negative implications.
The announcement "reflects the potential that Entergy's underlying business may have been irreparably harmed by the devastation wrought by Hurricane Katrina," the ratings agency said.
"The economic restoration of New Orleans and the surrounding communities is clearly going to be a painful and prolonged process, which may permanently weaken Entergy's credit quality," said Standard & Poor's credit analyst John Kennedy.
Whether or not Entergy's (ETR, Trade) credit quality erodes will depend on several factors, including restoration cost estimates, economic viability of the region, the level of responsiveness from state authorities, including regulators, and the timeline for Entergy to recover its storm costs, Standard & Poor's said.
At the end of June, the New Orleans, La.-based utility had about $8.5 billion of debt outstanding.
Entergy said Wednesday morning that 950,091 customers in Louisiana and Mississippi were without power, down from more than one million on Tuesday. The company is also dealing with "severely damaged" natural gas pipelines in New Orleans, Louisiana, accompany spokesman said.
Entergy, the second largest nuclear generator in the U.S., owns and operates power plants with approximately 30,000 megawatts of electric generating capacity and delivers electricity to 2.7 million customers across Arkansas, Louisiana, Mississippi and Texas.