Friday, December 09, 2011
There is more than one way to play the shift from fossil to renewable energy. I decided to look at a group of the largest USERS of energy - the electric utilities - to find the greenest of the power producers. It occurred to me that I was not the first to ask that question and quickly found a list of the top ten “green” utilities published by the National Renewable Energy Laboratory.
1. Austin Energy (private)
2. Portland General Electric (POR: NYSE)
3. Pacifico (PPW-P: Nasdaq)
4. Florida Power & Light (private)
5. Sacramento Municipal Utility District (community owned)
6. Xcel Energy (XEL: NSE)
7. National Grid, Plc (NGG: NYSE)
8. Basin Electric Power Cooperative (community owned)
9. Puget Sound Energy (private)
10. OGandE Electric Services (OGE: NYSE)
Candidly I was a bit surprised to find that half the list is made up of municipal, cooperative or otherwise privately held entities. I expected the list to be composed mostly, if not entirely, by large publically traded utilities, which have put quite a bit of effort into burnishing a “green” reputation for both consumer and investor brownie points.
Are utilities with a head start in embracing renewable energy in a better position competitively? Are their revenue and profits more sustainable having already begun the shift from fossil fuel to a mix of energy sources? Regardless of your view on the threat of global warming or even your political views on the
dependence upon imported oil, there is a move underway toward renewable fuels, which is not likely to reverse in the near or even mid-term. Accordingly, I answer both these with "yes, better positioned" and "yes, more sustainable earnings." U.S.
If I am correct then these publically held leaders could present compelling investments for investors. We will be looking at each - POR, PPW-P, XEL, NGG and OGE - to find the investment case...if there is one.
Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.
$POR, $PPW-P, $XEL, $NGG, $OGE