Market tools can slake Cape Town’s water thirst 19 Mar 2018 The South African city’s taps may not run dry this year, but low rainfall, population growth and invasive flora keep the threat alive. Poor governance adds to the risk. Tradable water rights could bypass many of those problems, and set an example for other arid regions.
H2O merger an important drop in $730 bln bucket 15 Mar 2018 That’s how much U.S. water utilities may be worth. Yet a deal creating the sector’s third-largest listed company values it at just $1.9 bln. The fragmented industry needs more tie-ups to cover rising costs and investment needs. Otherwise the country’s water quality could suffer.
German utilities give new setup chance of success 13 Mar 2018 E.ON expects 600-800 million euros of synergies from its mega-asset swap with fellow German utility RWE. Both companies have announced better 2017 results than expected. That puts their carve-up of Innogy on a firmer footing.
German energy carve-up generates good sparks 12 Mar 2018 RWE is splitting its ailing Innogy unit in a 22 bln euro deal with rival E.ON. The former will focus on generating power, while the latter specialises in distribution. A knotty asset swap obscures the value picture. But the plan enjoys stronger logic than previous reshuffles.
How Corbyn could grab British water at little cost 19 Feb 2018 If the Labour leader nationalised utilities at market values, the UK’s gross debt would rise by 80 bln pounds. Yet a not-for-profit model could achieve similar ends at little direct cost to taxpayers. The damage depends on how clumsily a Corbyn government handles the transition.
Suez public sector blowback makes for sorry trend 24 Jan 2018 Shares in the French water group fell 16 percent after a profit warning. Utility-like groups with long-term public contracts typically enjoy a low cost of capital. But having governments as clients is no safeguard, as Veolia and Carillion have already shown.
Elliott finds another target for its power play 23 Jan 2018 FirstEnergy shares spiked after a $2.5 bln capital injection from the activist hedge fund and others. Elliott is reprising a ploy that made NRG the best performer in the S&P 500 last year. That deal had hiccups though, and the latest one will too. Shareholders should buckle up.
Dominion finds value in Scana’s nuclear meltdown 3 Jan 2018 The Richmond-based energy outfit is acquiring the South Carolina utility in a $7.9 bln stock swap. Cleaning up the financial waste of Scana’s abandoned atomic plant will stretch Dominion’s debt, but gaining customers hungry for its natural gas should compensate.
America better at finding natural gas than using it 29 Dec 2017 Booming production has made the country a net exporter. But consumers are on pace to use less electricity from natural gas in 2017. As issues from Atlanta to Florida pressure the grid, shale’s promises of “energy independence” hit policy and infrastructure obstacles.
Utility merger rightly up against Texas brigade 30 Oct 2017 Vistra is buying Dynegy in an all-stock deal to create a power dynamo stretching from Texas to Maine. It makes sense for shareholders, but regulators in the Lone Star State are prickly. The firms will have to allay concerns that synergies will come out of consumers’ pockets.
German vote bodes ill for utilities and autos 26 Sep 2017 Chancellor Angela Merkel may well turn to the Greens to form a coalition government. The party’s priority is combating climate change. Carbon-heavy power producers like RWE and carmakers wedded to the internal combustion engine are likely to be the first in the firing line.
U.S. electricity grid is a Category 5 problem 18 Sep 2017 Hurricane Irma left much of Florida without power after ripping down transmission lines. Burying cables is one fix, if time-consuming. But storms are just one catastrophe threatening the nation’s aging electricity infrastructure. Upgrading it could cost as much as $2 trillion.
Beware Brazilian promises to relinquish control 23 Aug 2017 The cash-and-corruption-challenged government dangled the idea of reducing its 51 pct voting stake in Eletrobras, the electric utility. While that sent the shares soaring by half, investors need only recall Brasilia's past stewardship at Petrobras and Vale to slow their samba.
Elliott is grasping at straws in Oncor battle 17 Aug 2017 The hedge fund says it has enough debt in the bankrupt utility to block Warren Buffett’s $18 bln offer. Yet the move makes little sense in the absence of a firm alternative. The judge is likely to see through Elliott’s posturing, as is the Omaha sage, who refused to up his bid.
Elliott’s Oncor delay mainly helps Elliott 28 Jul 2017 The hedge fund won more time to find $9 bln to take the Texas utility’s parent out of bankruptcy. Its plan values Oncor more highly than Berkshire Hathaway’s agreed offer. But it looks as if Paul Singer’s fund would get most of the benefit. That makes Elliott’s deal a tough sell.
Elliott tests one of Warren Buffett’s golden rules 11 Jul 2017 Paul Singer's hedge fund has cobbled a rival bankruptcy-exit plan for Energy Future, challenging Berkshire Hathaway's $9 bln deal. The new offer may be a stretch, but Buffett famously eschews competitive processes. He also needs approval from creditors, one of which is Elliott.
Rare sense prevails in reworked U.S. utility deal 10 Jul 2017 Great Plains tried to buy next-door power provider Westar, but regulators nixed the plan. In a new roughly equal $14 bln merger, the target gets a lower headline price and the buyer less control. It's an unusually pragmatic compromise considering how often egos undermine M&A.
Buffett may have to turn on charm for Oncor encore 7 Jul 2017 Berkshire Hathaway is taking a second stab at Texas utility Energy Future, six years after a $2 bln investment led to big losses. Two other suitors failed to agree with regulators. Buffett's structure sounds smarter, but sealing the $18 bln deal could yet require some sweet talk.
Natural gas inflicts fresh wounds on old victim 22 Jun 2017 Southern risks a new writedown after regulators tired of waiting for a novel “clean-coal” plant. As with its troubled nuclear project, the $50 bln U.S. utility tried untested designs. Efforts to diversify fuel sources are admirable but cheap gas prices continue to crush them.
Water investors will get used to cash calls 19 May 2017 Shares in Sao Paulo utility Sabesp plunged on news it may raise equity for post-drought projects. But its funding needs and already high leverage were no secret. With the global water sector requiring $10 trln of investment, this Brazilian capital raise won’t be the last.