Seeking Alpha

Utilities surge as power auction foreshadows higher electric bills

The utility sector is among the day's best performers after the annual capacity auction at PJM Interconnection, which runs the largest U.S. power grid, forecasts payments to electricity producers will jump to $120/MW-day vs. $59.37 in the previous 12-month period and expectations of $75-$100.

The higher capacity price is a boon to power producers, which rely on the payments as baseline revenues; the auction results are viewed as another endorsement of natural gas.

The outlook is particularly favorable for Exelon (EXC +3.9%) and FirstEnergy (FE +6%), according to S&P's Aneesh Prabhu; PPL Corp. (PPL +2.9%) also benefits, especially considering that the price in its region was expected to fall.

The price for Public Service Electric & Gas' (PEG -0.2%) utility territory in northern New Jersey was set at $215/MW-day, down from $219 a year earlier.


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Comments (9)
  • wyostocks
    , contributor
    Comments (8867) | Send Message
    As for the consumer, screw them.
    Good thing electric costs don't count in the CPI.
    27 May 2014, 02:35 PM Reply Like
  • al roman
    , contributor
    Comments (6943) | Send Message
    NJ got the short end.


    (D) & (SRE) noteworthy,(PEG) still better than T bill.
    27 May 2014, 03:03 PM Reply Like
  • wyostocks
    , contributor
    Comments (8867) | Send Message


    Don't they always?
    27 May 2014, 03:10 PM Reply Like
  • al roman
    , contributor
    Comments (6943) | Send Message


    (PEG) solid hold,(UIL) #1 liquidity share they don't accredit for the PGW acquisition until Jan 2015 pay 4.99%
    But yes Sir good old NJ as usual.
    27 May 2014, 03:17 PM Reply Like
    , contributor
    Comments (1158) | Send Message
    in last few years seems my power bill always goes up. Gas bill too despite having deregulated utilities and choices. Pick lowest cost provider each year and have bill go up 15% it seems. :/ Yes I am just south of (FE) HQ in Akron & see what the power costs. (EXC) and (FE) are both in my portfolio so guess this boost in share price can offset my elec bill ? lol
    27 May 2014, 03:59 PM Reply Like
  • nemonemo
    , contributor
    Comments (334) | Send Message
    Obama: "Your electricity bill will necessarily skyrocket". Probably only promise he kept.
    27 May 2014, 04:20 PM Reply Like
  • MisterJ
    , contributor
    Comments (999) | Send Message
    Just like the fake moon landing in 1969 and the California drought it's always President Obama's fault. Right on.
    27 May 2014, 06:25 PM Reply Like
  • bdarken
    , contributor
    Comments (575) | Send Message
    He's savin' the planet, don't-you-know!


    Only a country with our education system
    could buy this crap.
    27 May 2014, 06:21 PM Reply Like
  • omarbradley
    , contributor
    Comments (964) | Send Message
    Obviously i've been attacked and laughed at (by Tome Keen of Bloomberg no less) for being uber bullish on utilities going on 5 years now. Needless to say i'm thankful for the attacks and laughter.


    of course some thinking as to meaning of such huge moves in what are "stocks for grandma" are clearly in order. i find it interesting that those who have attacked me so moronically and for so long haven't taken a step back and asked "what is the meaning of this."


    i know i have...and have been long treasuries for over a year because of it. "and yes, they've missed that one too." one can only hope they miss the implications of that rally because simply put "if you're working for an institution of any size or consequence a huge rally in the treasury complex only means one thing."


    and yes...i'm pro management in addition to being bullish..and of course pro soldier too.
    28 May 2014, 01:49 AM Reply Like
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