First Positive Month Since August 2008
March roared out with 63 component companies positive for the month, with only 30 down. For the most part, C Three’s indices were driven by general market trends, but none kept up with the overall market.
The Dow Jones Industrials and the S&P 500 were up 7.6 percent and 8.5 percent respectively. The best performing index was the Less Regulated Electric Index, which was up 5.44 percent.
Otter Tail continues to be a favorite because of its small holdings in wind energy manufacturing. The Minnesota PUC, however, issued its order on allowing the building of transmission lines from Otter Tail’s proposed Big Stone plant. Essentially, it places significant environmental restrictions on the plant output, which will add to the cost and feasibility of the proposed coal-fired unit.
Mergers and acquisitions rumors are swirling again around Calpine.
Pipelines continue to hold their own.
ITC Holdings received Federal Energy Regulatory Commission tariffs for its proposed Kansas projects.
While 63 component companies were in positive territory in March, 30 were not.
PEPCO’s $5 billion in planned capital expenditures and the financial requirements it will require were not considered good news. Ohio regulatory rulings helped drive down both AEP and FirstEnergy. National Grid’s multinational presence and its lack of detailed U.S. financial filings obscure the drivers of its downward slide. It has a heavy presence in New England, an area not known for being particularly regulatory-friendly. AES’s perceived balance sheet weakness and expensive debt offering pulled it further down during March.
Year to date, only 10 index components are in positive territory. Pipelines generally lead the pack. Less regulated electric as a group brings up the rear. Over a five-year window, the less regulated gas index still comes out on top, even with the steep declines it has seen since July. All of the indices have outperformed the Dow Jones Industrial Index during the past five years.
Many pundits say we have not hit bottom yet. GE CEO Jeffrey Immelt recently said the economy is in a “reset.” The electric sector is on the cusp of a major reset. Are the days of rapidly increasing unit sales behind us for a while?
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 tracked, what would those shares be worth after a certain time? Historical share prices are adjusted for dividends, splits and spin-offs.