Exclusive C Three Equity Index: 2007 Ends on High Note

The less regulated, the better

For all but the regulated electric and gas combination utilities, 2007 ended on a positive note. The less regulated the better in 2007, with the least regulated electric beating all the others.

While 2007 had its bumpy moments, for the most part it ended on a positive note for 61 of our 96 component companies. Thirty-five companies ended 2007 below where they started in 2007. Forty-one of our component companies, or less than half, outperformed the Dow Jones Industrial Average for 2007, whereas 63 companies, or more than two-thirds, outperformed the Dow for the past five years. Less regulated companies, gas or electric focus, continued to outperform their more regulated brethren.

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The groupings of the indices have been changed to more accurately reflect how the energy industry is evolving. Many companies have gone almost completely “back to basics” while others have continued to pursue less regulated strategies. We cut and diced this data in as many permutations possible for client-specific projects. We took a quantitative approach to decide which company would go into which group, based on third quarter 2007 year-to-date financial reports.

Less regulated electric focus: More than 50 percent of revenues come from sources that are not state regulated and/or more than 33 percent of assets are not state regulated.

Less regulated gas focus: More than 50 percent of revenues come from natural gas distribution and/or more than 33 percent of assets are not state 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 non-regulated 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 non-regulated 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 non-regulated activities.

The C Three Index: The non-weighted average of each of the companies included in the groupings above.

For more, visit www.cthree.net.

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