Several trends seem to have emerged during the recent flurry of quarterly earnings calls by power generators.
For starters, it seems that everybody is talking about the weather. A milder-than-normal winter in many parts of the country depressed the usual level of electricity demand. Companies such as American Electric Power (NYSE: AEP) felt the impact on their bottom line. Duke Energy (NYSE: DUK) saw the lowest number of heating degree days on record in North and South Carolina.
Coal plants are especially affected by this weak power demand due to the combined of that and the allure of $2 natural gas that has gas units being used more. Southern Co. (NYSE: SO) for example expects 47% of its power to be sourced by natural gas in 2012 compared to only 35% from coal.
CEOs at heavy coal-burning utilities were quizzed by analysts about the level of their coal stockpiles. Duke said that coal piles are larger than usual but have not reached maximum storage levels of 75-to-80 days of tonnage.
In addition, many companies are touting their plans to either buy or build new simple-cycle or combined-cycle natural gas generation.
Not all the coal news is bad, however. Generators with significant numbers of older, unscrubbed coal units are happy that the Cross-State Air Pollution Rule, CSAPR, an acronym pronounced ‘Casper’ like the friendly ghost, has been placed on hold by a federal appeals court.
If nothing else, this gives coal-burning generators more time to work the economic calculus of whether to retrofit these coal units or retire them in favor of natural gas generation.
As usual, litigation and regulation are always big sources of conversations on these calls. There is the litany of U.S. EPA standards facing coal plants along with the push for more regulation of natural gas extraction methods like fracking.
Nuclear power is also keeping the lawyers and regulators busy as well. Entergy (NYSE: ETR) in particular is facing various legal issues that affect the fate of its Vermont Yankee nuclear plant in Vermont and its Indian Point units in the state of New York.
The vexing issues of unplanned plant outages and capital projects that take longer or cost more than expected also intrude from time to time.
Duke is not only involved in a merger with Progress Energy (NYSE: PGN) that’s dragging on longer than expected, its much-discussed Edwardsport coal gasification power plant in Indiana is costing more than initially forecast. The Edwardsport IGCC tab is now expected to exceed $3bn although the good news is the modern coal plant should be running this fall.
Nuclear plants seem to have the most-discussed unplanned outages. Progress Energy’s Crystal River nuclear plant now hopes for a 2014 return. Edison International (NYSE: EIX) subsidiary Southern California Edison says not to expect its mammoth San Onofre nuclear plant back in time for the summer heat.
NRG Energy (NYSE: NRG) and its partners are happy to see their South Texas Project nuclear project off the list of generating units experiencing extended unplanned outages. But Energy Future Holdings (NYSE: EFH) has a couple of coal units still wrestling with long, unplanned outages.