Weaker Still: The 2009 Utility Financial Rankings

by Teresa Hansen, editor in chief

Last year, Electric Light & Power magazine characterized the 2008 financial rankings as “showing signs of weakness.” Unfortunately for the 83 utilities included in the rankings, 2009 was weaker still.

As in past years, Jean Reaves Rollins of the C Three Group LLC, a senior management and research advisory firm to the energy industry, provided the financial data for this report. Last year during Reaves Rollins’ interview for the 2008 report, she predicted utilities in 2009 would experience significant decrease in unit sales.

She was right.

Overall, revenue was down more than 14 percent for 2009 (near 2006 revenue). Constellation Energy fell from No. 1 in 2008 to No. 9 in 2009. Integrys Energy dropped out of the top 10, falling from No. 10 in 2008 to No. 24 in 2009. Otherwise, the top 10 utilities in the revenue ranking were the same as last year, only in slightly different order.

The nation’s economy, which is still struggling to recover, has impacted utilities negatively, and they have continued to tighten their belts.

Actual 2009 expenditures were down 10.5 percent from 2008, the first time since 2004 that capital expenditures were down from the previous year.

Although some of the industrial demand for electricity is returning, continued uncertainty about carbon legislation and recovery of incurred costs is impacting investment in large generation and transmission and distribution infrastructure capital projects. (Read Thomas J. Flaherty’s “The Megaproject Challenge” on page 40 for more detail.)

Although most utilities curbed spending and slashed budgets in 2009, capital and noncapital free cash flows took many utilities further into negative territory. Southern Co. had the largest negative free cash flow at almost $1.5 billion, nearly triple its negative free cash flow in 2008.

While other utilities in the rankings had swings larger than 150 percent, none were in the billion-dollar range. In addition to being last in the negative free cash flow ranking, Southern Co. also was No. 1 on the capital expenditures ranking, increasing its 2009 capital expenditures almost 18 percent in 2008 to $4.67 billion. The utility increased its capital expenditures nearly 56 percent during the past four years. Southern Co.’s negative cash flow and increased capital spending are likely the “weak financial metrics” Moody’s Investors Service mentioned when it downgraded Southern Co. and three of its four power utilities in August. Moody’s also mentioned “economic slack in its Southeast U.S. service region and rate uncertainty” as reasons for the downgrade.

One small bright spot in 2009 is seen in income from continuing operations ranking. This number increased nearly 3 percent from the 2008 number, which was close to minus 6 percent.

The tables for this report, created from Rollins’ data, tells utilities’ basic financial story for 2009. Data from 2006-2008 reports also are included in the tables.

Readers who wish to compare the data from earlier reports may access the archived September-October issue at http://elp.com.

Utility Financial Rankings

More Electric Light & Power Current Issue Articles
More Electric Light & Power Archives Issue Articles

Previous articleComEd proposes plan to modernize Illinois electric system
Next articleSeptember

No posts to display