Capital expenditures in power sector rises slightly in second quarter

Charlottesville, Va., August 27, 2009 – According to a survey by SNL Interactive, capital expenditures of power companies dropped about 4 percent in the 12-month period ending second quarter 2009 compared to the first quarter, while net income during this same period increased by about 4 percent.

Power demand for these same companies has declined by 6 percent to 7 percent over prior-year levels for three consecutive quarters.

Despite this decline, capital expenditures rose about 1 percent in the second quarter over first-quarter levels. Thirty-seven of the 71 largest power companies covered by SNL reported increases in capital expenditures in the second quarter over the first quarter of 2009, with 30 reporting decreases, and four not yet reporting second-quarter numbers.

Four companies ramped up their capital expenditures in the second quarter of 2009 by at least 50 percent more than first-quarter spending, according to SNL Energy data. This group was led by Environmental Power Corp. with an increase of 546 percent, followed by Portland General Electric Co., which increased its second-quarter capital expenditures by $213 million, or 234 percent.

Quarter-to-quarter capital expenditure changes can vary based on the timing of individual projects with annual numbers providing a better picture of trends. OGE Energy Corp. saw the largest increase in capital expenditures at 132 percent for the 12 months ending in the second quarter of 2009 compared to the 12-month period ending in the first quarter, though it has decreased its quarterly capital expenditures for the second consecutive quarter.

Unitil Corp. had the second largest increase in capital expenditures over this same time period, ramping up capital expenditures by 91 percent. Among this top group, Great Plains Energy Inc. had one of the most significant absolute increases in capital expenditures over the period at nearly $446 million, representing a 64 percent increase.

Overall, 43 out of 71 companies increased their capital expenditures between the 12-month period ending in the first quarter of 2009 and the second quarter of 2009, while 22 reported decreases, one reported no change and five have not yet reported.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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