More Interesting View is a Longer-term Snapshot–Five Years
If we look at the performance of our composite companies during the past five tumultuous years, the performance of this group becomes clearer. Half of the top 20 performers are either LDC or Less Regulated Companies. These are led by National Fuel Gas and South Jersey Industriesand include Energy Inc., NJ Resources, WGL Holdings, Questar, Northwest Natural Gas, Southwest Gas, Oneok Partners and TC Pipelines.
Many of the LDCs have minimized their risk in their core business by the implementation of decoupling, rational regulatory strategies and full-cost coverage of purchased gas. The shale oil boom has been especially good to NFG and EQT. Questar’s spin-off of its E&P business traded under QEP has been neutral for shareholders after some fairly large swings in value since July.
Prop 23 is just another example of entrenched interests wanting to keep the status quo no matter the greater consequences. Much of the business is being driven by the replacement of older electric generating capacity with newer and cleaner options, including natural gas, wind, solar and geothermal. These energy sources are driving the need for new transmission lines. All of these activities create good, well-paying U.S. jobs. Rolling back the driver of many of these initiatives, such as renewable energy mandates and targets, will bring these industries to a stop. Without a clear national energy policy, California’s policy has been serving as substitute. Without it, we are back to complete ambiguity, which will halt further investments to a halt.
Methodology and Components of Each Index Tracked by The C Three Group
Less Regulated Electric Focus. More than 50 percent of revenues come from nonstate-regulated sources and/or more than 33 percent of assets are nonstate-regulated.
Less Regulated Gas Focus. More than 50 percent of revenues come from nonstate-regulated natural gas distribution and/or more than 33 percent of assets are nonstate-regulated.
Regulated Electric. No more than 20 percent of revenues can come from natural gas distribution and no more than 49 percent of revenues and 33 percent of assets can be associated with nonregulated activities.
LDC. No more than 20 percent of revenues can come from electric distribution or generation and no more than 50 percent of revenues and 33 percent of assets can be associated with nonregulated activities.
Regulated Electric and Gas Combination. More than 20 percent of revenues derived from natural gas distribution, no more than 50 percent of revenues and 33 percent of assets from nonregulated activities.
The C Three Index. The C Three Index is the nonweighted average of each of the companies included in the groupings above. The C Three Indices are developed based on a straightforward premise: If you invested $100 in each of the stocks of the companies we track, what would those shares be worth after a certain time? Historical share prices are adjusted for dividends, splits and spin-offs.