McCarthy says the agency made changes when developing its rules on mercury pollution in 2012 after utilities complained, and says she "wouldn’t be surprised if we made significant” revisions to the carbon proposal.
McCarthy notes "confusion" around the targeted 30% emission cuts, saying it’s not a goal of the plan but an estimate of what the EPA thinks can be achieved.
Walter Energy (WLT -6.3%) shares aren't helped by the coal producer's statement that new EPA proposals aimed at controlling carbon emissions from U.S. power plants should have no material impact on the company; in fact, WLT is down more than peers: CNX +1.1%, BTU +0.1%, CLD -0.3%, ACI -2.8%, ANR -4.6%.
Long-term losers also will include electric companies that burn lots of coal - such as American Electric Power (AEP +0.1%), Duke Energy (DUK -0.3%), Southern Co. (SO -0.3%) and NRG Energy (NRG -0.1%) - but stiff regulations have been expected for some time.
Likely winners include companies that pump natural gas and those that use it as their primary fuel, such as Calpine (CPN +0.3%), and companies that operate nuclear plants that generate little carbon but have been expensive to run, such as Exelon (EXC -1%), hope that their aging plants will become more competitive.
A reduction in coal-fired capacity would increase utilities' demand for natural gas by 3B-10B cf/day from 22B cf/day now, potential benefiting major natural gas producers like Chesapeake Energy (CHK +2.1%), Cabot Oil & Gas (COG -0.8%) and Range Resources (RRC -0.6%).
Heavy winter use strained the capacity of regional transmission organizations and electric companies such as American Electric Power (AEP -2.7%) and led to, at times, 22% (40K MW) of forced outages for generating capacity vs. the average rate of 7%.
The Ohio group says the increased outage rates are proof that generating units are not being properly maintained to ensure that they work during peak demand.
American Electric Power (AEP +1.7%) shares hit all-time highs after reporting Q1 earnings surged 54% thanks to "the coldest temperatures in 35 years," which led to strong residential and commercial demand.
AEP says it saw improvement across residential and commercial customer classes, even if demand is adjusted for the weather.
Overall utility margins increased 13% to $1.5B on favorable rate decisions and lower temperatures.
Raised 2014 EPS guidance to $3.35-$3.55 vs. $3.35 analyst consensus estimate and prior guidance of $3.20-$3.40.
Defense is working nicely today as the utility sector (XLU +1.4%) makes a strong move higher with the rest of the market lit up bright red. Few have had use for the steady dividend payers since rates started rising in May, but the sector has stabilized over the past month and is particularly well-bid today amid panicky action in high-flying momentum favorites.
Some individual names: Southern Company (SO +1.9%), Edison International (EIX +1.9%), Duke Energy (DUK +1.6%), FirstEnergy (FE +1.5%), XCel Energy (XEL +2.1%), American Electric Power (AEP +1.6%).
Utilities are getting a bit of a reprieve after taking a beating over the past few days. Option implied volatility has been increasing as investors rotate out of high dividend yield positions in the wake of a rise in treasury yields: AEE +1.7%, D +0.3%, DTE +1.9%, EIX +0.6%, ETR +1.3%, EXC +0.7%, FE +0.9%, NEE +1.7%, PEG +0.8%, PPL +0.5%, SRE +1.3%, TE +0.5%, AEP +0.8%, DUK +0.6%, ED NU +1.6%, PCG +1.2%, SO +0.4%, XEL +1.3%.
The continuing decline in natural gas (off 6.9% today) and resultant fall in electricity prices is shelving alternative energy projects from NextEra (NEE), Exelon (EXC), and CMS, but Michael Morris of American Electric Power (AEP) warns about becoming too dependent on gas. "The way to make $4 gas, $8 gas is for everyone to go out and build ... natural-gas plants."
American Electric Power Co Inc is a public utility holding company, through its subsidiaries, provides electric service, consisting of generation, transmission and distribution, on an integrated basis to its retail customers.