Daily Archives: May 1, 2008

Sun Microsystems (JAVA): Expelling Jonathan Schwartz

Jonathan Schwartz has become the kind of fast-talk, no delivery CEO whom investors loathe. He was the president of Sun Microsystems (JAVA) and in an appalling lack of judgment the company’s board picked him to replace founder Scott McNealy. McNealy had done a fairly poor job, but he was willing to insult Harvard classmate Steve Ballmer in public and could play hockey and golf

Scwhartz has a pony tail and writes a blog. He was out of his league on day one.

Scwhartz has driven Sun in dozens of directions, none of them worthwhile. He has "embraced" the chip business, the open source movement, and an attempt to keep Java as a viable platform. He hoped to get some attention by reverse splitting the firm’s stock and changing the company’s ticker symbol from SUNW to JAVA,, as if that would make any difference.

Schwartz has also been superb at firing the innocent. Another round of 1,500 to 2,500 souls will hit the exits over the next few months.

What Schwartz has not done is sell servers, the core to the company’s success. Revenue keeps moving down. In the most recent quarter sales dropped a tick to $3.266 billion and the company moved from a profit a year ago to a loss in the most recent period.

Sun’s shares are heading toward $10 with increasing velocity. The stock sold off 14% to $13.95 after the earnings announcement, putting below its 52-week low. The price was above $26 early last year.

Nearly everyone on Wall St. is puzzled about how Schwartz can keep his job as a serial failure.

Sun’s board needs to admit that Scwhartz is a long-time poseur who blogs incessantly about how great Sun and its people are just before axing them. And, the board has an opportunity to do something for shareholders by pushing Schwartz out before he damages the company beyond repair. Unless it is there already.

Douglas A. McIntyre

Posted on: May 1, 2008 – 6:11 pm in Earnings,

IPO FILING: Safety-Kleen HoldCo. (SK)

Safety-Kleen HoldCo. has submitted its IPO filing with the SEC today. The filing shows a maximum proposed offering price of $300 million, although this number is for filing purposes only.

The company has applied to trade on the New York Stock Exchange under the ticker “SK.” Underwriters for the transaction are listed as Merrill Lynch and JPMorgan.  An affiliate of JPMorgan will also be selling shares in the IPO.

Safety-Kleen is a leading provider of comprehensive environmental solutions such as providing used oil collection, re-refining and recycling, and parts cleaning services, containerized waste services, and vacuum services in North America. They have been in business for over 40 years and operate 75% of the re-refining capacity of used oil in North America. They are a market leader in their businesses, have a strong brand name, and recurring revenue stream from a wide, diverse customer base. They served 33,000 customers in 2007, including 420 of the top Fortune 500 companies, generating revenue of $1.1 billion and a net income of $4.5 million.

You can join our open email distribution list to hear about other IPO’s, SPAC’s, secondary offerings, special financings, and other special situations.

Jon C. Ogg
May 1, 2008

Posted on: May 1, 2008 – 3:35 pm in IPOs,

Sun (JAVA) Earnings: Solar Eclipse

Sun (NASDAQ: JAVA) showed Wall St. once again that it is simply not a viable or relevant large tech company.

Revenues for the third quarter of fiscal 2008 were $3.266 billion, a decrease of 0.5 percent as compared with $3.283 billion for the third quarter of fiscal 2007  Wall St. expected earnings of $.18 a share on $3.38 billion in revenue. Net loss for the third quarter of fiscal 2008 on a GAAP basis was $34 million, or $(0.04) per share, as compared with net income of $67 million, or $0.07 per share, for the third quarter of fiscal 2007.

"The U.S. economy presented Sun with significant challenges in the third quarter, masking our progress in developing nations and economies across the world," said Jonathan Schwartz, CEO of Sun Microsystems.

"Masked" is not the right word. Sun does not have any meaningful and growing demand for its products. The company’s PR did not show revenue by region so investors cannot see the break-out of Sun revenue and operating income by regions.

The company has now added to the large number of quarters when it has disappointed investors.

Shares are down over 1% after hours to $16.12.

Douglas A. McIntyre

Posted on: May 1, 2008 – 3:09 pm in Earnings,

The 52-Week Low Club (NWK)(MGM)(PDGI)(RDEN)

Network Equipment (NWK) Misses numbers and gets downgraded. Falls to $3.95 from 52-week high of $15.75.

MGM Mirage (MGM) Slowdown in casino earnings at key rival. Sells off to $47.89 from 52-week high of $100.50.

Pharmanet Development (PDGI) Awful quarter. Shares dumped to $15.41 from 52-week high of $43.05.

Elizabeth Arden (RDEN) Posts loss. Drops to $13.13 from 52-week high of $28.05.

Hologic (HOLX) Profit picture falls apart. Sells down to $21.25 from 52-week high of $36.44.

Irobot (IRBT) CFO departs as do solid numbers. Falls to $13.19 from 52-week high of $24.30.

Douglas A. McIntyre

Posted on: May 1, 2008 – 2:48 pm in HI/LOW, , , , , ,

SPAC Liquidation: HD Partners Acquisition Corp. (HDP)

HD Partners Acquisition Corp. (AMEX: HDP) (AMEX: HDP.U) (AMEX: HDP.WT), a SPAC, has been liquidated today. The Company will pay out $149,622,864.99 of the trust funds available to shareholders, resulting in $7.97989 per share to its stockholders. Payments will be distributed May 5, 2008.

The public offering was declared effective June 1, 2006 and trading commenced June 8, 2006 at $8.00 per share. They received public and private proceeds from the offering of $141,090,000.

 

You can join our open email distribution list to hear about previews for other mergers, spin-offs, break-ups, IPO’s, special financings, and other special situations.

Rachel Lopez
May 1, 2008

Posted on: May 1, 2008 – 2:30 pm in IPOs,

Biotech Business Daily (ANIK, ATHX, HALO, IDRA, MRK, OMPI, REGN, DDD, SQNM)

There are lots of names moving in biotech and related fields today, and below are some of the top movers:

Anika Therapeutics Inc. (NASDAQ: ANIK) moving up after reporting solid first quarter earnings this morning. The leader in tissue protection products and healing and repair based on hyaluronic acid (“HA”) technology showed double digit revenues in each product line for total revenue growth of 39%. Shares are up over 12% at $9.68. The 52-week range is $7.85 to $22.49.

Athersys, Inc. (NASDAQ: ATHX) dropping a whopping 23% today on no relevant news. Shares are down $0.70 to $2.30. The 52-week range is $1.55 to $10.00.

Halozyme Therapeutics, Inc. (NASDAQ: HALO) up over 8% to $5.37. They announced that first quarter earnings will be released May 8 after market close and on May 9 they will provide a pipeline update. The 52-week range is $4.19 to $11.00.

Idera Pharmaceuticals, Inc. (NASDAQ: IDRA) announced today that under its collaboration agreement with Merck (NYSE: MRK), they achieved a preclinical milestone with a novel Toll-Like Receptor 9 agonists for an adjuvant in cancer vaccines. Idera should receive a milestone payment from Merck. Idera is up 3% to $14.34 off a 52-week range of $6.21 to $14.00. Merck is up over 1% to $38.77 on a 52-week range of $ 36.80 to $61.62. 

Obagi Medical Products, Inc. (NASDAQ: OMPI) is up over 7% to $8.62 on now news. The 52-week range for the skincare developer is $6.80 to $25.60.

Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) up 5% today after first quarter results were released this morning. They showed a loss of $11.6 million, or $0.15 EPS, narrower than the $29.9 million loss in first quarter 2007. Shares are up $1.11 to $20.73. The 52-week range is $13.55 to $28.74.

SCOLR Pharma Inc. (AMEX: DDD) up over 8% today after announcing that it entered into a lease buyout deal to move into a cheaper location, with the proceeds of over $4 million, the company said it will be able to fund 2009 expenses. Shares are trading at $1.26. The 52-week range is $0.13 to $4.07.

Sequenom Inc. (NASDAQ: SQNM) up today after reporting financial results after close yesterday. They posted a net loss of $8.6 million compared to a loss of $3.8 million in first quarter last year. Revenues increased by 7%. Shares are trading up over 8% to $6.85 on a 52-week range of $3.16 to $11.63.

Rachel Lopez
May 1, 2008

Posted on: May 1, 2008 – 1:58 pm in Biotech, , , , , , , , ,

WisdomTree Launching Currency Income ETF’s (WSDT, CYB, ICN, BZF, JYF, EU)

WisdomTree Investments, Inc. (Pink Sheets: WSDT) and The Dreyfus Corporation, a BNY Mellon Asset Management Company, announced the launch of five WisdomTree Dreyfus Currency Income ETFs on the NYSE Arca.

The ETFs are actively-managed and designed to earn current income that reflects money market rates that are available to foreign investors in the specific region. Additionally, they will be exposed to changes in non-U.S. currencies values compared to the U.S. dollar. Being actively-managed, the ETFs will have greater flexibility but still maintain the transparency that makes ETFs so attractive. This fund targets short-term, investment grade instruments and as a result, the share price is expected to be volatile.

The funds are expected to commence trading on Tuesday, May 13, 2008. The ETFs are listed below:

  • WisdomTree Dreyfus Chinese Yuan Fund (NYSE Arca: CYB)
  • WisdomTree Dreyfus Indian Rupee Fund (NYSE Arca: ICN
  • WisdomTree Dreyfus Brazilian Real Fund (NYSE Arca: BZF)
  • WisdomTree Dreyfus Japanese Yen Fund (NYSE Arca: JYF)
  • WisdomTree Dreyfus Euro Fund (NYSE Arca: EU)

Rachel Lopez
May 1, 2008

Posted on: May 1, 2008 – 1:51 pm in ETF, , , , , ,

GM (GM): April Down 16%, Toyota (TM) Slips

April sales at GM (GM) fell 16.2% to 257,638.  Adjusted for two extra selling days sales dropped 22.7% led by a 32 percent decline in truck sales. Reuters reports that iInventory fell to about 824,000 vehicles at the end of April, down about 206,000 vehicles from a year earlier to the lowest level since September 2005

Toyota (TM) reported a 4.5%t drop in April sales to 217,700 vehicles after adjusting for two more selling days in the month compared with the same month a year earlier. According to the AP sales of passenger cars rose 11.9% to 134,863 units from 120,556 in the same month last year, while light-truck sales fell 7.9% to 82,837 from 89,901.

Douglas A. McIntyre

Posted on: May 1, 2008 – 1:07 pm in Autos, ,

Will Sun Microsystems Live Up To Plan? (JAVA)

Today after the close of trading we’ll get to see earnings out of Sun Microsystems Inc. (NASDAQ: JAVA). The estimates from First Call are $0.18 EPS on $3.38 billion in revenues.  Next quarter estimates are $0.39 EPS on $3.96 billion in revenues. Estimates for fiscal June-2008 are $1.13 EPS on $14.19 billion in revenues. Estimates for June-2009 are $1.36 EPS on $14.74 billion in revenues.

Analysts have an average price target north of $20.00, and Sun Microsystems’ 52-week trading range is $14.20 to $25.04 after you adjust for that November 1:4 reverse stock split. The most recent analyst call with any changes was an equal-weight rating initiation from Lehman Brothers.Shares are down more than 10% since the start of 2008 and have fallenby about 20% since their 1:4 reverse split since early November.

Options traders appear to be braced for a move of only about $0.58 to $0.65 in either direction, although this is after a 3% move and with a lot of time value left.

Sun has been making some interesting bolt on acquisitions, but many traders are still confused over the company’s plans and over its path to maintaining more steady profits.  As far as which other stocks may be affected regularly based upon Sun Micro’s earnings report, that answer is generally none.  Not anymore.

Jon C. Ogg
May 1, 2008

Posted on: May 1, 2008 – 12:56 pm in Earnings, Technology Companies,

ETF Launch: PowerShares Three Asset Allocation ETF’s (PCA, PAO, PTO)

Invesco PowerShares Capital Management LLC listed three new exchange traded funds (ETF) on the NYSE Amex. The ETFs will give investors exposure to long-term, core asset allocation strategies by investments in other ETFs. The ETF’s are as follows:

  • PowerShares Autonomic Balanced NFA Global Asset Portfolio (AMEX: PCA)
  • PowerShares Autonomic Balanced Growth NFA Global Asset Portfolio (AMEX: PAO)
  • PowerShares Autonomic Balanced Growth NFA Global Asset Portfolio (AMEX: PTO)

They are risk-controlled asset allocation portfolios that invest in specific ETFs by New Frontier Advisors.  These ETFs use the patented Resampled Efficiency optimization process by New Frontier Advisors to select appropriate weights of ETFs in which the index invests. The fund is expected to launch May 15, 2008.

PCA – PowerShares Autonomic Balanced NFA Global Asset Portfolio ties to the New Frontier Global Dynamic Indexes. This index uses a patented The profile includes 60% equities and 40% taxable fixed income.

PAO – PowerShares Autonomic Balanced Growth NFA Global Asset Portfolio ties to the New Frontier Dynamic Balanced Growth Index. PAO includes 75% equities and 25% taxable fixed income.

PTO – PowerShares Autonomic Growth NFA Global Asset Portfolio ties to New Frontier Global Dynamic Growth Index. The PTO includes approximately 90% equities and 10% taxable fixed-income.

Rachel Lopez
May 1, 2008

Posted on: May 1, 2008 – 11:35 am in ETF, , ,

Ford (F) Slaughtered, April Sales Down 12%

If car sales are any indication of the broader economy, it is time to get to the food lines.

In April, retail sales at the company fell 12% to 200,727. The only division which rose was Jaguar, and Ford just sold that off to Tata Motors. Based on number of selling days in the month this year and last, the actual adjusted drop for Ford was over 18%.

Truck sales, were the company makes most of its money, were off 18% to 120,814. The flagship F-150 watched its units drop 21% to 44,813, an acceleration from earlier in the year.

Sales of the firm’s little cars and crossovers moved up some. Sales of the Fusion jumped 22% to 15,059, and moved up 43% to 23,850 for the Focus. The profit margin on those fuel-efficient cars sure isn’t what it is for the F-150.

Whomever said there was a turnaround at Ford better check to see if their brains are missing.

Douglas A. McIntyre

Posted on: May 1, 2008 – 11:14 am in Autos,

Generex Biotech Holders File To Unload (GNBT)

Generex Biotechnology Company (NASDAQ: GNBT), a drugdelivery system and technology developer, has filed an offering by sellingstockholders of up to 74,475,861 shares of common stock. The proposed maximum aggregateoffering price is $78,199,653, but this number is for filing purposes.

The offering consists of up to 22,527,275 shares of commonstock issuable upon conversions of a $20,650,000 principal amount of 8% SecuredConvertible Notes due September 2009, and up to 51,198,347 shares of commonstock issuable upon the exercise of warrants.  

The company itself will not receive any proceeds fromthe offering.

Generex is up almost 1% to $1.07 in early morning trading.The market cap sits at $119.3 million and the 52-week range is $0.81 to $2.14.

You can join our open email distribution list to hear about previews for other mergers, spin-offs, break-ups, IPO’s, special financings, and other special situations.

Rachel Lopez
May 1, 2008

 

Posted on: May 1, 2008 – 10:47 am in Biotech, Secondary Offering,

ProShares ETF Launch: Short Selling Treasuries (PST, TBT)

The American Stock Exchange announced the launch of two new exchange traded funds by ProShare Advisors LLC today. The UltraShort Lehman 7-10 Year Treasury ProShares (Amex: PST) and UltraShort Lehman 20+ Year Treasury ProShares (Amex: TBT) make the total ETF’s listed by ProShares on the American Stock Exchange reach 62.

Both ETF’s give exposure to inverse performance of fixed income indexes, in other words "Short Selling" and probably qualified for IRA’s.

PST targets investment results on a daily basis that relate to twice the inverse of the daily performance of the Lehman Brothers 7-10 Year U.S. Treasury Index which includes all public, investment grade, non-convertible U.S. Treasury securities with $250 million or more par outstanding.

The TBT relates to twice the inverse of the daily performance of the Lehman 20+ Year U.S. Treasury Index. This includes public, investment grade, non-convertible U..S. securities with a par value of $250 million or more.

Jon C. Ogg
May 1, 2008

Posted on: May 1, 2008 – 10:35 am in ETF, ,

Sun Healthcare Well-Served On Secondary Filing (SUNH)

Sun Healthcare Group (NASDAQ: SUNH) has filed for a mixed shelfoffering of $200 million this morning. They may periodically offer a combinationof common stock, preferred stock, debt securities, and warrants. The prospectusindicates the rehabilitation center and hospice operator does not have currentplans to sell any of these securities. The proceeds will be used for generalcorporate purposes including working capital, capital expenditures, and businessacquisitions.

Yesterday, Sun Healthcare released strong first quarterearnings, showing a 74% increase in revenue to $458.2 million from $262.6million first quarter last year. Net income was $8.6 million compared to $3.9million last year.  

Sun Healthcare is up $0.06 to $13.21 in early morningtrading. The 52-week range is $11.72 to $18.78. The market cap currently sitsat $566.7 million.

You can join our open email distribution list to hear about previews for other secondary offerings, mergers, spin-offs, break-ups, IPO’s, special financings, and other special situations.

Rachel Lopez
May 1, 2008

Posted on: May 1, 2008 – 10:23 am in Medical, Secondary Offering,

Rights Offering Pounds Guaranty Financial Group (GFG)

Guaranty Financial Group (NYSE: GFG) announced an offering of subscription rights to its shareholders. The terms have not yet been set for the non-transferable subscription rights although the subscription price will likely be at a discount to the current share price. Shareholders that fully exercise their rights while will be given an over-subscription privilege.

They have entered into standby purchase agreements with various institutional investors and the number offered to them is based on the number of shares subscribed by their shareholders in the rights offering. The directors have indicated their intentions to fully exercise subscription rights.

The deal manager for the offering is Keefe, Bruyette, & Woods. Proceeds from the offering for the Texas and California based bank and insurance company will be used for general corporate purposes, including investments in subsidiaries. 

Since the company went public December 13, 2007 at $17.50 per share, they have steadily declined in share price to consistently below $12.00. Today, the stock is down 8% to new lows at $7.07. The 52-week range for the stock is $18.50 to $7.50. The current market cap is sitting at about $251 million.

You can join our open email distribution list to hear about previews for other mergers, spin-offs, break-ups, IPO’s, special financings, and other special situations.

Rachel Lopez
April 30, 2008

Posted on: May 1, 2008 – 10:02 am in Financial Stocks, Secondary Offering,

Shutterfly (SFLY): A Death Rattle From Web 2.0

Shutterfly (SFLY) calls itself an Internet-based social expression and personal publishing service. In reality, it is a simple online photo storage, swapping, and printing service.

No matter what it is, the company is not doing very well. Its shares fell over 17% today after it announced Q1 earnings. The stock fell through its 52-week low and traded down to $12.65. The stock has been as high as $37 during the period.

Shutterfly is not growing like a Web 2.0 company. Revenue rose 29% to $34,3 million. The company forecast Q2 revenue to be up 17% to 27% to a revenue range of $35 to $38 million. In other words, no growth quarter-over-previous-quarter.

Shutterfly also displayed the uncanny ability to lose more money that it did last year. The company’s net loss went to $3.6 million from $1.1 million in the quarter a year ago.

A look at the company’s P&L shows another source of the trouble. Shutterfly is spending way too much money. Expenses rose from $17 million in Q1 last year to $28.4 million in the last quarter.

If the company is not going to grow very fast, at least it could control expenditures.

Douglas A. McIntyre

Posted on: May 1, 2008 – 9:56 am in Media,

More Ups & Downs in the Oil Patch (APA, MRO, GLF, BP)

Apache Corp. (NYSE:APA) reported net income of $1.02 billion and $3.03 EPS for the first quarter of 2008, more than double same period results for 2007 of $492 million and $1.47 EPS. Revenue jumped to $3.19 billion from $2.02 billion a year ago. Analysts were looking for revenue of $3.06 billion and $3.05 EPS. So far this morning, the stock is taking a beating, down more than $5.00. Because APA is strictly an E&P play, it’s relatively easy to link estimates to the price of crude. There’s no big mystery waiting to be revealed.

That’s not the case with an integrated oil company, like Marathon Oil Corp.(NYSE:MRO), which also reported first quarter 2008 results this morning. MRO showed earnings of $731 million and $1.02 EPS for the quarter, compared with earnings in the same period last year of $717 milliion and $1.03 EPS. First quarter revenues totaled $18.1 billion, compared with $13 billion in the same period a year ago. Analysts were expecting revenues of $22.16 billion and $0.82 EPS. MRO’s refining segment reported a loss of $75 million in the quarter, compared with a gain of $345 million last year. MRO refined more barrels than a year ago, but lost $0.26/gallon of refined product. Losses on derivatives changes cost the company $120 million in the first quarter. MRO stock is trading up nearly a buck in early morning trading. Go figure.

Gulfmark Offshore (NYSE: GLF) is trading down by 5% in the first hour of trading. CapitalOne Southcoast downgraded its rating on the stock to a "Neutral" rating from an "add" rating.

BP plc (NYSE: BP) shares probably would have been lower with thee rest of the sector, but shares are dowm almost 1% at $72.17.  HSBC Securities downgraded its prior "Overweight" rating down to a "Neutral" rating.

Paul Ausick
May 1, 2008

Posted on: May 1, 2008 – 9:40 am in Oil & Gas, , , ,

Las Vegas Sands (LVS): The Wages Of Sin Get Expensive

Divide the chips as you will. Las Vegas Sands (LVS) had a pitiful quarter. Revenue rose from $628 million to $1.079 billion. The good news ended there.

Operating income fell from $131 million in the period a year ago to $96.6 million in the most recent quarter. Interest expense rose for $34.6 million to $114.7 million. As of March 31, 2008, total debt outstanding, including the current portion, was $8.37 billion

The company did poorly in it home city of Las Vegas. Operating income decreased 36.4% to $57.4 million, compared to $90.3 million in the 2007 period.

LVS said it was doing poorly in Macoa because of competition. That is not likely to let up. If the future of the company is in the Far East, LVS does not have much of a future.

Las Vegas Sands shares are down 11% at $68, near their 52-week low and way off their period high of $148.76.

Douglas A. McIntyre

Posted on: May 1, 2008 – 8:53 am in Casinos,

JDSU (JDSU) Enterprise Broadband Spending Stays Down

It is the age of broadband, but no one could tell that from the results of companies which supply equipment to the broadband suppliers like cable and telecom firms

JDSU (JDSU), one of the oldest companies in the industry, reported poor earnings. Net revenue for the third quarter of fiscal 2008 was $383.9 million and the net loss was $6.2 million, or $(0.03) per share. This compares to net revenue of $361.7 million and a net loss of $14.2 million or $(0.07) per share for the third quarter of fiscal 2007.

What was worse was guidance. JDSU said that for the fourth quarter of fiscal 2008, ending June 28, 2008, the it expects non-GAAP net revenue to be in the range of $381 to $403 million, In other words, the business is not growing at all.

With capital spending dropping in the teeth of a bad economy, companies like JDSU may have a very rough year. Wall St. will be watching for orders to pick up as broadband landline and wireless picks up. If JDSU is not growing by then, it means the company is bleeding market share.

Douglas A. McIntyre

Posted on: May 1, 2008 – 8:42 am in Earnings,

Higher Utility Bills Coming; Rate Relief Filed (FE, CHG, AEE, AYE, GAS)

While many utilities are reporting earnings, there is one thing that many investors will care about more than each company’s results.  It seems that utilities across the board are filing with state or regional boards for rate relief to pass on higher costs to customers.

First Energy Corp. (NYSE:FE) today reported first quarter earnings of $276 million, or $0.91 EPS, compared with earnings of $290 million and $0.92 EPS for the same period in 2007. First quarter revenues totaled $3.3 billion, better than analyst estimates of $3.14 billion and $0.85 EPS. First Energy noted that high fuel costs and higher costs for purchased power reduced EPS by $0.19.

Earlier this week, CH Energy Group Inc. (NYSE:CHG) reported that revenues increased by more than 19%, but net income declined by about 4% and EPS decreased by about 4%. The company’s chairman and CEO had this to say: "Higher energy supply costs are resulting in higher total bills, inducing our customers to conserve, and sales volumes are noticeably affected." In other words, people turn down the heat in an effort to save money, and it costs the utilities money.

So what do utilities do? They go to their state public utility regulators and ask for rate hikes. First Energy has sought a rate increase in  Ohio of $340 million. Central Hudson is seeking an unspecified rate increase during the summer. Ameren Corp (NYSE:AEE), which will report earnings tomorrow, is seeking rate annual increases of 12.1% ($251 million annually) in Missouri and $247 million in Illinois.

The blame for the rate hikes resides largely with rising fuel costs. Coal prices have nearly doubled in the past year, and average natural gas prices at the wellhead have increased by about 25%. The utilities have a point. But they are also seeking increases to their regulated return, usually by about 1%-2%. State regulators so far are not impressed. Last year, Ameren requested a rate hike of $361 million in Missouri, which state regulators trimmed to a recommended $43 million. Both the company and government officials in Missouri are appealing the ruling. The company because the recommended increase is insufficient; the government, because it is too high.

Allegheny Energy, Inc.’s (NYSE: AYE) Potomac Edison Co., has also filed a request with the
Virginia State Corporation Commission for recovery of the cost of purchasing power for its Virginia customers.  It is asking for the recovery of a minimum of $73 million for the 12-month period beginning July 1, 2008, which would boost customer electric bills by about 29% if certain costs can’t be mitigated.

Nicor Inc. (NYSE: GAS) has also filed with the state of Illinois to pass on higher gas costs to its 2.2 million northern Illinois customers.  The rate hike request will add about $4.60 per month to the average residential electric bill, which would take effect in spring 2009.  While the company is saying this isn’t due to the cost of gas because Nicor buys on wholesale and passes on to customers without any mark-up, but this is "for the cost of delivery to the homes and businesses."  Delivery, material…. six of one, half a dozen of the other.

Higher gas prices, higher coal prices, and higher raw materials and transportation costs are going to be influencing residence and business utility bills.  If you think this is bad, wait until potable water shortages become more and more prevalent.  Higher utility bills are on the way, probably across the country and beyond.

Paul Ausick
May 1, 2008

Posted on: May 1, 2008 – 8:32 am in Utilities, , , , ,