Duke Energy Corp. (NYSE: DUK), Spectra Energy Corp. (NYSE: SE), The AES Corp. (NYSE: AES), Ameren Corp. (NYSE: AEE), and Alliant Energy Corp. (NYSE: LNT) reported first quarter earnings this morning, and the results are mixed to say the the least.

Duke reported first quarter adjusted EPS of $0.38, topping the consensus estimate of $0.37. Revenue came in at $3.63 billion, better than the estimate of $3.6 billion. In the company’s announcement, it had this to say about the weather: “On an adjusted basis, the effects of mild weather during the quarter were largely offset by the implementation of new customer rates in the Carolinas and reduced operation and maintenance costs at the regulated utilities.” The company also said that it expects to get regulatory approval for its purchase of Progress Energy Inc. (NYSE: PGN).

Spectra reported EPS of $0.51, one penny below the consensus estimate. Revenues totaled $1.54 billion, down -4% from the same period a year ago and well below estimates of $1.62 billion. Spectra, too, blamed the weather, and low natural gas prices: “First quarter 2012 earnings in line with expectations, except for the effects of lower commodity prices and warmer-than-normal weather.” Spectra primarily operates natural gas transmission and distribution lines.

AES reported adjusted EPS of $0.37, significantly better than the consensus estimate of $0.27. Revenues totaled $4.74 billion, again well above the estimate of $4.5 billion. AES did not blame the weather or complain about low prices. The company’s Latin American operations provided the boost. The company reaffirmed guidance with a caveat that cash flow from operations and free cash flow would be at the lower end of their respective ranges. AES also lowered its expected earnings from continuing operations by $0.06 for the year.

Ameren reported adjusted EPS of $0.22 versus a consensus estimate of $0.23. Revenues totaled $1.66 billion, again a slight miss compared with the estimate of $1.7 billion. Ameren did blame the weather for lower natural gas sales and low electricity prices for reducing demand. The company did reaffirm full-year EPS guidance of $2.20-$2.50 versus the consensus estimate of $2.33.

Alliant reported adjusted EPS of $0.50, well down from the consensus estimate of $0.63. Revenue totaled $765.7 million, sharply lower than the estimate of $822.1 million. Warm weather cost the company 22 heating days, with an negative impact of -$0.12 on adjusted EPS. The company reaffirmed full-year EPS guidance of $2.75-$3.05 versus a consensus estimate of $2.93. Alliant also said that full-year EPS would be near the lower end of the range.

Duke and AES, both of which derive a good portion of their revenues and profits from power generation, were able to overcome the effects of warm weather and low natural gas prices even though both companies complained about the weather. The gas companies had a tougher time, but only Alliant really got battered by warm weather effects.

Paul Ausick

The Flame Index started as a research tool in 2008 at the NY Innovation Design Lab (nyidlab). It was used as a general metric to evaluate companies and their risk in the media. Publicly traded Fortune 500 companies are used as a measure to calculate an overall market of negative news and the companies are ranked within that market.

Data and ranking provided by the Flame Index.

To show just how bad the market has been even to utilities, the leading ETF is the Utilities Select Sector SPDR (NYSE: XLU) and its shares have fallen 4.6% since Friday closing Wednesday at $30.99 with a 52-week range of $25.76 to $32.89.  We did of course not cover every single utility with nuclear power, but our coverage below accounts for a combined market capitalization rate of more than $100 billion.  Our review focused on Ameren Corporation (NYSE: AEE), Constellation Energy Group, Inc. (NYSE: CEG), Entergy Corporation (NYSE: ETR), Exelon Corporation (NYSE: EXC), FirstEnergy Corp. (NYSE: FE), Progress Energy Inc. (NYSE: PGN) and Southern Company (NYSE: SO).

We broke out how much each of the partial US nuclear energy complex has fallen since Friday, what the 52-week range is, what the market caps are, and which are some of the listed nuclear properties which we took from the U.S. Nuclear Energy Institute.

Ameren Corporation (NYSE: AEE) is down only about 3.5% since Friday with shares at $26.79; 52-week range is $23.09 to $29.89 and its market cap is $6.4 billion. Nuclear properties include Callaway.

Constellation Energy Group, Inc. (NYSE: CEG) is down about 6% since Friday with shares at $30.30; 52-week trading range is $27.64 to $38.73 and its market cap is roughly $6 billion.  Nuclear properties include Calvert Cliffs, Ginna, and Nine Mile Point.

Entergy Corporation (NYSE: ETR) is down almost 9.5% since Friday with shares at $66.65; its 52-week trading range is $66.31 (hit today) to $84.33 and its market cap is about $12 billion.  Nuclear properties include Arkansas Nuke 1 & 2, Grand Gulf, Indian Point, James A. Fitzpatrick, Palisades, and River Bend.

Exelon Corporation (NYSE: EXC) is down almost 7% since Friday with shares at $39.95; its 52-week trading range is $16.78 to $45.56 and its market cap is $26.5 billion. Nuclear properties include Braidwood, Bryon, Clinton, Dresden, La Salle, Limerick, Oyster Creek, Peach Bottom, Quad Cities, Salem, and Three Mile Island.

FirstEnergy Corp. (NYSE: FE) down almost 6% since Friday with shares at $36.59; 52-week range is $33.57 to $40.80 and its market cap is $11.2 billion.  Nuclear properties include Beaver Valley and Perry.

Progress Energy Inc. (NYSE: PGN) is down ‘only’ almost 4% since Friday with shares at $44.55; 52-week trading range is $37.13 to $46.83 and the market cap is about $13.1 billion.  Nuclear properties include Brunswick, Crystal River, H.B. Robinson, and Shearon Harris.

Southern Company (NYSE: SO) is down close to 4% since Friday with shares at $36.80; 52-week range is $32.04 to $38.79 and its market cap is close to $31 billion.  Nuclear properties include E.I. Hatch, J.M. Farley and Vogtle.

Many of these plants have switch-over capabilities, but there is one thing to consider here.  Despite these plants being old, shutting these plants down in any short order is just not likely in the cards barring maintenance or other disasters.  Switching to fossil fuels is also a much more costly initiative for consumers.

What seems to be at issue is that newer regulations would come with a higher cost of securing and operating “safe nukes” if there is such a real term.  Our take is that nuclear expenses will rise as a result, but the future demand damage of uranium may make the fuel cheaper ahead and any higher regulatory and security costs that the plants take on will probably be passed down to Joe America.

JON C. OGG

Ameren Corporation (NYSE: AEE) Cut to Underperform at BofA/ML.
Archer Daniels Midland Company (NYSE: ADM) Started as Hold at Jefferies.
Bank of America Corporation (NYSE: BAC) Cut to Market Perform at KBW.
Charter Communications, Inc. (NASDAQ: CHTR) Started as Sector Perform at RBC.
Comerica Incorporated (NYSE: CMA) Started as Outperform at Wells Fargo; Cut to Market Perform at KBW; Cut to Hold at S&P Equity Research late-Wednesday.
Progress Energy Inc. (NYSE: PGN) Cut to Neutral at BofA/ML.
Randgold Resources Ltd. (NASDAQ: GOLD) Raised to Strong Buy at S&P Equity Research (late Wednesday call).
Raytheon Co. (NYSE: RTN) Cut to Market Perform at FBR.
Regions Financial Corp. (NYSE: RF) Raised to Buy at S&P Equity Research (late Wednesday call).
The St. Joe Company (NYSE: JOE) Raised to Outperform at KBW.
Starwood Hotels & Resorts Worldwide Inc. (NYSE: HOT) Raised to Neutral at Baird.
The Talbots Inc. (NYSE: TLB) Started as Outperform at Oppenheimer.
Tyson Foods Inc. (NYSE: TSN) Started as Buy at Jefferies.
Verisign Inc. (NASDAQ: VRSN) Cut to Perform at Oppenheimer.
Wynn Resorts Ltd. (NASDAQ: WYNN) Raised to Overweight at JPMorgan.

You can join our free daily email distribution list to hear more about dividend trends, analyst upgrades and downgrades, top day trader and active trader alerts, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

After reviewing this data, 24/7 created a list of The Twenty Companies Wall St. Can Trust The Most. The firms are ranked based on their Accounting and Governance Risk scores.

The list represents companies that have practices which should be emulated by every public company that wishes to serve the needs of its shareholders by presenting accurate financial data and providing conservative management of shareholder’s investments.

The Twenty Companies Wall St. Can Trust The Most:

Methodology: The Audit Integrity Accounting and Governance Risk (AGR) rating is a forensic measure of the transparency and reliability of a corporation’s financial reporting and governance practices. The focus of AGR analysis is on identifying the measures most highly associated with fraud, and quantifying those risks for interested stakeholders in relation to company stock price, securities litigation, and major restatement probabilities.

Audit Integrity applies over 100 accounting and governance metrics to a company’s publicly-filed information. The resulting calculation produces the AGR, a percentile score ranging from 0 to 100, with corresponding ratings from Very Aggressive to Conservative.

Companies rated Very Aggressive or Aggressive have proven to be much more likely to face class action litigation and financial restatements, and to suffer severe equity loss. Conversely, those companies that have been consistently rated Conservative have been shown to be the most trustworthy.

AGR significantly improves the predictivity of traditional risk models.

The AGR and its underlying metrics are used by regulators, auditors, insurance companies, investment managers, and corporations, and are often incorporated in reporting by major financial media.

Douglas A. McIntyre

Exelon is joining nine other companies that have filed applications with the NRC to build 29 new reactors in the US. NRG Energy (NYSE:NRG), Dominion (NYSE:D), Duke Energy (NYSE:DUK), Progress Energy (NYSE:PGN), and Ameren Energy (NYSE:AEE) among others have also filed construction and operating license applications with the NRC.

Yesterday, Exelon announced that it had submitted its application tothe US Nuclear Regulatory Commission to build a two-unit nuclear powerplant in Victoria County, Texas, about 130 miles southwest of Houston.The two reactors could produce up to 3,000 MW of electricity, enough tosupply 1.85 million houses annually. The company anticipates that theNRC review will take 3-4 years, and doesn’t expect a decision until2012.

This is a deeply political issue regarding energy policies from bothsides of the aisle in Washington as McCain is pro-nuclear and Obama iscurrently against any new nuclear energy facilities.  No new nuclearenergy plants have been built in the US in more than 30 years. The newround of activity follows on the Energy Policy Act of 2005, whichoffered loan guarantees to help construct new plants and a tax break topay for decommissioning of older plants.

The nuclear power industry touts the CO2-free generation ofelectricity, the industry’s safety record, and job creation. But theprimary arguments favoring new nuclear generation are scale and speed.There is simply no other form of non-fossil-fuel generation that cansupply the growing demand for electricity in the same time frame.Nuclear power also supplies base-load, whereas wind and solar areusually considered intermittent sources because the sun is not alwaysshining nor is the wind always blowing.

Critics of new nuclear generation have some powerful arguments as well.First, of course, is Chernobyl, and second is Three-Mile Island. Theseare real concerns, but the industry has always derided them, pointingout that Chernobyl was badly designed and poorly built, and that theshut-down at TMI was not a failure but a success. Those answers arelittle comfort to the general public, which equates nuclear power withHiroshima and Nagasaki. Other criticisms include the carbon footprintattributable to the construction of new plants, availability ofuranium, water usage, and waste disposal.

These are all valid issues, and together with the safety issues, willrequire a political solution. As the applications work their waythrough NRC reviews, public discussion and scrutiny will increase. Itis difficult to envision new electricity capacity without nuclearpower, especially over the next 20-30 years. What remains to be seen iswhether politicians and industry leaders are able to reach someagreements.  This will remain a political topic of the highest order,so stay tuned.

Paul Ausick
September 4, 2008

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