Electric Utilities Make News on Expectations, Merger Plans (LNT, EXC, NRG)

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Alliant Energy Corp. (NYSE:LNT) this morning released financial guidance for 2009. The company also noted that it has reached an agreement with the state of Wisconsin on a rate case settlement that will keep natural gas prices to consumers flat, resulting in revenue decrease of about $4 million. Alliant apparently decided that trying to raise consumer rates now was a loser.

Alliant expects earnings for 2008 to be about $2.65/share, at the lowend of previous guidance. Analysts expectations for EPS are $2.64, sotoday’s numbers should raise any issues.

However, guidance for 2009 is substantially lower. EPS for the naturalgas business is forecast at $2.18-$2.48, and for the utility businessat $1.95-$2.25. Analysts had been expecting EPS for 2009 at $2.84. Thecompany’s president and CEO noted that Alliant’s rising rate base is"more than offset by declining retail sales" and unfavorable rate casesettlements.

Alliant also revealed that planned capital expenditures for 2009 totalnearly $1.3 billion, of which $435 million is targeted for developingwind power generation. To keep investors happy, Alliant will increaseits dividend from $1.40/share to $1.50/share.

This is barely a lukewarm forecast, and Alliant shares were down more than 5% this morning.

In another issue we’ve been watching, Exelon Corporation (NYSE:EXC) hasfiled Hart-Scott-Rodino notice in connection with its hostile takeoverbid for NRG Energy, Inc. (NYSE:NRG). Exelon failed to impress NRGmanagement with the offer, so it took the deal directly to investors.

Exelon also filed an application with the Federal Energy RegulatoryCommission (FERC) to approve the merger. In that filing, Exelonproposed to divest certain facilities in Texas and the mid-Atlanticstates in order to "protect and enhance competitive markets andmitigate any potential market concentration." All told, Exelon proposesto divest about 4,600 megawatts of capacity in order to complete thedeal with NRG.

Exelon shares are up about 1%, and NRG shares are up about 2% thismorning. Exelon’s tender offer to NRG shareholders expires on January6th, unless Exelon decides to extend it. The company did not provideinformation on how many shares have already been tendered.

Paul Ausick
December 18, 2008