Coal Cost Reduction Saves Big for Utilities
-
Font Size:
click to enlarge
As you can see from the chart, courtesy of the Energy Information Administration Division of the U. S. Department of Energy, the NYMEX price of Central Appalachian Coal Futures is the lowest it's been in the last three years. You will notice that the tiny orange line on the left next to the $40 and trending downward, is lower than the blue 2004 line, the purple 2005 line, and the green 2006 line [with the exception of a short period in November].
As of the end of last week, the price per ton was $38.75, far below its high of $63 back in August and September of 2004.
So what does this mean for utility stocks? Since more than half of all utilities use coal for electrical generation, the fuel cost reduction can cause a major savings in expenses for the companies. The following is a list of electrical utilities which use coal as a fuel to generate at least 40% of their electricity [the ones with very high coal generated electricity have been noted]:
Ameren Corporation (AEE) [over 85%]
ALLETE Inc. (ALE)
Allegheny Energy Inc. (AYE) [over 75%]
CMS Energy Corp. (CMS)
DPL Inc. (DPL)
DTE Energy Co. (DTE) [over 70%]
Duke Energy Corp. (DUK)
Firstenergy Corp. (FE)
Great Plains Energy Inc. (GXP) [over 70%]
Aquila Inc. (ILA)
MDU Resources Group Inc. (MDU) [over 70%]
MGE Energy Inc. (MGEE)
Nisource Inc. (NI) [over 85%]
OGE Energy Corp. (OGE)
Otter Tail Corp. (OTTR)
PNM Resources Inc. (PNM) [over 70%]
SCANA Corp. (SCG)
Southern Co. (SO)
TECO Energy Inc. (TE)
Unisource Energy Corp. (UNS)
Wisconsin Energy Corp. (WEC)
WPS Resources Corp. (WPS)
Westar Energy Inc. (WR) [over 75%]
Xcel Energy Inc. (XEL)
- Global Sector ETFs: Utilities, Healthcare and Staples Are Providing Shelter »
- Utilities Shine Again in Q2, Trailing Only Energy »
- As Costs Rise, Consumer Staples and Utilities Should Outperform »
- Investment Ideas With Potential From the One-House Grid »
- Barclays' Power Play: A New Family of Electric Power Indexes »
Get Seeking Alpha Free Stock Alerts by Email!
Get Free Stock Alerts by Email!
-
Editor's Picks
-
Most Popular
- The Disastrous Future of the U.S.
- Is There a "Best Way" to Invest in Wind Power?
- Yahoo Partners with Getty Images: Strategic Shift for Image Search?
- Bank of America vs. Banco Santander: Whose Dividend Is Secure?
- Fannie, Freddie, and Financing Models of Last Resort
- Fannie and Freddie: Let’s Call the Whole Thing Off
- Full list of Editor's Picks »
- 10 Top Dividend Stocks of the S&P 500 »
- The Screws Tighten on Apple Investors »
- Wall Street Breakfast: Must-Know News »
- The After Hours Oil Scam »
- Attention Apple Investors: Analysts You Don’t Know But Should »
- Sirius and XM Satellite Merger Set for Approval; RBC Lowers Price Targets »
- Coal Stocks: Where to From Here? »
- Sirius-XM Merger Decision Delay Is Unacceptable »
- Bargain Hunting: Stocks With Strong Earnings Growth »
- Stocks to Buy Before the Oil Bubble Bursts »
- Potash Corp. Looks Good on the Pullback »
-
Long Ideas
-
Short Ideas
-
Cramer's Picks
- Nuclear Power's Second Coming Will Lead to a Uranium Boom
- Is Boeing Ready To Take Off?
- Biotech is Healthy - Fast Money Recap (7/8/08)
- Google's Still Good - Cramer's Lightning Round (7/8/08)
- The Sound of Silence in Financials - Cramer's Mad Money (7/8/09)
- Is GE Action a Sign of a Turn?
- Verasun Energy: Expect Future Growth and Profitability
- Who Will Crack the CIGS Nut in Thin Film?
- American Capital Strategies: Ride the Recovery
- Bovie Medical: Prelude to Acquisition?
- Full list of Long Ideas »
- Red Flags at Typhoon Touch Technologies
- Risk/Reward of Owning REITs, Raymond James in this Boom Bust Cycle
- Sell and Short Recommendations for a Bearish Market
- Covering Down Some of My Short Positions
- What's Going on With uWink?
- Brokerage Stocks: Trouble on the Horizon?
- 5 Reasons Amphenol Will Have Trouble Exceeding Expectations
- Looking To Profit From the Market's Plunge
- Crystal River’s Q2 Write-Downs Could Bankrupt the Company
- Assurant Is A Compelling Short Sell
- Full list of Short Ideas »
- Biotech is Healthy - Fast Money Recap (7/8/08)
- Google's Still Good - Cramer's Lightning Round (7/8/08)
- The Sound of Silence in Financials - Cramer's Mad Money (7/8/09)
- More Pain for Petrohawk - Cramer's Lightning Round (7/7/08)
- Recession Season - Cramer's Mad Money (7/7/08)
- StanCorp a Safe Financial - Cramer's Lightning Round (7/2/08)
- Momentum Stocks Stalled - Cramer's Stop Trading! (7/3/08)
- Expecting a Lift for Pediatrix: Cramer's Mad Money (7/3/08)
- The Most Bullish Thing - Cramer's Stop Trading! (7/1/08)
- Exelon's Got Nukes - Cramer's Lightning Round (7/1/08)
- Full list of Cramers Picks »
Most Popular Feeds
-
ETFs
-
US Market
-
Long Ideas
-
Alt. Energy
- Full list of feeds »
Hedge Fund Jobs
Job Seekers:
- Search jobs by category
- Get job alerts by email or live feed
- Apply online
Employers
- See all recruitment options
- Get applications online or by email



This article has 2 comments:
Competitors are trying to lure customers away emphasizing the new rate hikes (see; electricityiq.com/illi... ). Overall, rate hike should yield higher returns, most likely leading to higher dividends as well.
Company expects cost of coal to increase 15-20% in 2007 from current levels! AEE hedges quite heavily. Lower spot prices probably won’t kick in for another 6 to 8 months (presumption only – no info).
CrossProfit
(CrossProfit website is down until the end of the month. All urgent notices posted on SA, in short comments).