We have provided the expected events, added in background and price data, added in color on each where applicable, and more.

Alcoa, Inc. (NYSE: AA) kicks off earnings Monday after the close and Thomson Reuters has earnings estimates of $0.19 EPS on $5.68 billion in revenues.  Be advised that at $16.42 its 52-week range is $9.81 to $17.60 and also know that this was around $12.00 before its October earnings.

Apollo Group Inc. (NASDAQ: APOL) is also due to report earnings Monday after the close.  It finds itself between the days of former growth and regulation out the (you know what)… It cannot be a value stock even if the numbers today suggest so.  The  regulation affecting forward business throws too many variables into the mix.  Thomson Reuters has estimates of $1.35 EPS and $1.26 billion in revenues.  At $37.98, its 52-week trading range is $33,75 to $66.69.

Duke Energy Corporation (NYSE: DUK) with a $23.5+ billion market cap is reported by the WSJ to be acquiring Progress Energy Inc. (NYSE: PGN) with its $13.1 billion market cap.  The WSJ homepage notes: “Duke Energy is close to a deal to buy Progress Energy in an all-stock merger that would value its smaller rival at more than $13 billion.”

Endo Pharmaceuticals (NASDAQ: ENDP) announced late Friday night that it received a complete response letter from the FDA on the application of its new formulation of OPANA® ER designed to be crush resistant.  Endo noted that this does NOT need those additional clinical studies be conducted for approval of the NDA, but noted that it currently anticipates responding to the FDA by mid-2011 and would expect a six-month review cycle once its response is filed.  The new formulation of OPANA ER is for moderate to severe pain in patients requiring continuous, around-the-clock opioid treatment for an extended period of time.

We wanted to take a look at Select Sector SPDR Trust (NYSE: XLU), Southern Company (NYSE: SO), Dominion Resources, Inc. (NYSE: D), Duke Energy Corporation (NYSE: DUK), FPL Group, Inc. (NYSE: FPL), American Electric Power Company (NYSE: AEP), Entergy Corporation (NYSE: ETR), FirstEnergy Corporation (NYSE: FE), Edison International (NYSE: EIX), Progress Energy Inc. (NYSE: PGN), PP&L Corporation (NYSE: PPL), Xcel Energy Inc. (NYSE: XEL), DTE Energy Company (NYSE: DTE) and more.

There may actually be some time for them to shine in the near future. Despite the rally market of the last month, almost none of these stocks are within 5% of their 52-week highs.  We showed the dividend yields implied here, although as with all ‘yields’ there is often some distortion.  What we did not show was a P/E ratio because of the lagging effect of that, but we did show was the closing price for March 31 as the quarter closed and compared that to the 52-week trading range and compared it to the average consensus price target from Wall Street analysts per Thomson Reuters.

So why is this sector in the spotlight?  The dividend yields should be attractive enough.  Most are 4% and higher.  This offers defensive stock positioning, dividend yields, and the hope for some upside.  Of course, some are barren of a dividend due to issues and turnarounds. That keeps investors from having to go out to REITs and take on all the risks there associated with land values and trends.  Historically, utilities have been largely considered defensive stocks in hard times.  Morningstar noted in its quarterly wrap-up, “Utility stocks were hurt in the quarter by falling commodity and energy prices, bearish earnings outlooks as firms reported earnings, and a generally negative view of the future of electricity demand.”  The problem with that call is that energy demand is not dropping any longer and some larger companies are starting to increase their power usage again.

Allegheny Energy (AYE) Cut to Neutral at Goldman Sachs.
Anglogold (AU) Cut to Neutral at UBS.
BJ Services (BJS) Cut to Hold at Jefferies.
CNOOC (CEO) Cut to Neutral at Credit Suisse.
Schlumberger (SLB) Cut to Hold at Jefferies.
WuXi PharmaTech (WX) Cut to Underperform at Jefferies.

JON C. OGG

According to Bloomberg, AEP sees difficulty in financingand getting approval for new coal-fired power plants. But new powertransmission lines will deliver electricity more efficiently fromexisting plants, and, the big plus, enable renewable generationprojects with wind and solar in more remote areas of the US.

In Texas, AEP and MidAmerican have proposed spending $1.2 billion tobuild 745 kilovolt lines from the Panhandle, where T. Boone Pickens,among others, have proposed building new wind farms. New windgeneration is also being built in the Dakotas and eastern Montana. Solargeneration expansion is also being planned in the southwest. Withouttransmission lines, none of these projects will be constructed because themarkets for the power lie hundreds, if not thousands, of miles fromthe generation point.

AEP already owns and operates more than 39,000 miles of high-voltagetransmission lines in the US. The US Energy Policy Act of 2005guaranteed, among other things, a return on equity for new powertransmission lines at the high end of regulated rates and full recoveryof construction costs in rates. That’s a pretty sweet deal.

There are a few issues. Right-of-way is one. High-voltage lines goingthrough populated areas are expensive and usually generate some publichub-bub. In remote areas, wildlife migration corridors can become anissue as power lines criss-cross unpopulated regions. Neither of theseis usually a show-stopper, though, and AEP knows it.

Combined with the Obama administration’s economic stimulus proposals,which include electricity generation infrastructure renewal,electricity transmission could prove to be a winner. Upgrading the USelectricity grid could cost up to a trillion dollars. And a journeyof a trillion dollars has to start somewhere.

Paul Ausick
January 26, 2009

Here is today’s list on the 52-week lows:

• Allegheny Energy Inc. (NYSE: AYE)
• American Axle & Manufacturing (NYSE: AXL)… gotta love those auto suppliers.
• Atlas Pipeline Partners (NYSE: APL)
• AU Optronics Corp. (NYSE: AUO) hit but didn’t stay under low
• Champion Enterprises (NYSE: CHB) again from yesterday
• Cumulus Media Inc. (NASDAQ: CMLS)
• Great Atlantic Pacific & Tea (NYSE: GAP)… who says food is safe???
• Macerich (NYSE: MAC) downgrade
• Mirant (NYSE: MIR)
• Reliant Energy Inc. (NYSE: RRI)
• Semgroup Energy (NASDAQ: SGLP) battered again after parent woes.
• Safeway Stores Inc. (NYSE: SWY)… who says food is safe???
• Virtusa Corp. (NASDAQ: VRTU) on downgrade

Jon C. Ogg
July 18, 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

Jon C. Ogg
June 26, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.