Trends in the Utility Sector: Rate Cases Being Filed More Frequently, Depreciation Costs Rise as Companies Start to Invest Heavily Into Their Systems, Says Expert Analyst Christopher B. Muir

Wall Street Transcript

67 WALL STREET, New York - August 23, 2013 - The Wall Street Transcript has just published its Alternative Energy Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Grid Parity Timelines for Alternative Energy - Asia Pacific Demand for Solar Energy - Alternative Energy Generation - Solar Energy Pricing - Government Subsidies and Regulation - Solar Growth Drivers and Headwinds - Regulatory Headwinds for U.S. Utilities

Companies include: Duke Energy Corp. (DUK), ITC Holdings Corp. (ITC), Nicor Inc. (GAS), Energen Corp. (EGN), EQT Corporation (EQT), National Fuel Gas Co. (NFG), New Jersey Resources Corp. (NJR), ONEOK Inc. (OKE), South Jersey Industries, Inc. (SJI), Questar Corp. (STR), UGI Corp. (UGI), WGL Holdings Inc. (WGL), The AES Corporation (AES), NRG Energy, Inc. (NRG), TransAlta Corp. (TAC), Centerpoint Energy Inc. (CNP), Dominion Resources, Inc. (D), Alliant Energy Corporation (LNT), MDU Resources Group Inc. (MDU), Nisource Inc. (NI), SCANA Corp. (SCG), Sempra Energy (SRE), Integrys Energy Group, Inc. (TEG), Entergy Corp. (ETR), AmeriGas Partners LP (APU) and many more.

In the following excerpt from the Alternative Energy Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Your outlooks for multiutilities, natural gas and electric utilities are all neutral. What changes could potentially make your outlook more positive for each of those subsectors?

Mr. Muir: Well, I can discuss natural gas utilities, multiutilities, for you; electric utilities are covered by another analyst. With natural gas utilities, I continue to see investment in distribution facilities that's going to continue to increase the asset base for the sector. That in turn over time leads to higher rates through rate cases, and in some cases they have riders and other mechanisms to recover these investments more quickly.

With respect to dividend yields, if interest rates come down on Treasuries, then that obviously is a benefit for utility stocks, because then the spread would widen between the utility dividend yields and Treasury yields. The market would likely then act to narrow the spread by pushing utility stock prices higher.

Then as well, customer growth is always something that benefits utilities, and if the economy improves, we would also see rising industrial demand.

TWST: You are wrapping up earnings season. What have been some of the key takeaways for your group, and were there any notable surprises?

Mr. Muir: The second quarter is considered to be a shoulder quarter for utility companies. You don't see the benefit for either extremely hot or extremely cold weather, which can drive electricity demand for home cooling or natural gas demand for home heating.

That said, the quarter was good for gas companies as there was lot more cold weather near the beginning of the second quarter...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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