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ideas ??
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Dead company.

I sold, took my lumps and am still bitter at Brunetti. Perhaps they will fire him, lose NRP, spin off NSP into its own company and I will probably buy that.

A cut in dividend tax would obviously help utilities - but probably not this one.

Xcel is hurting in Minnesota where the public utilities commission is not allowing any rate increases, the attorney general is all over the board and their largest nuke plant is running out of spent fuel storage room and, thanks to a deal they struck a decade ago, the american indians at the site apparently have veto power over any expansion. And they are adamately against expansion!

The only good thing about Excel that I see is that they have the naming rights to the Excel Energy Center in St. Paul where the Minnesota Wild NHL team is going to make the playoffs for the first time in team history (we are an expansion team from three or four years ago, so that is not bad).

Sorry to be such a downer. I'm just bitter (bitter cold, too - it is minus 7 today).

-Chuck
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Still holding this piece of $h1t, bought @ 25. Don't know what to do so I just keep hanging on. Should have taken the 12 bucks and moved on. Ed
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reply to myself.....


"Although we are all disappointed by the need to delay in the first quarter dividend, I want our shareholders to understand that we intend to make every effort to pay out the full dividend of 75 cents per share during 2003," Brunetti added.

Wish I had read this a couple of days ago. I guess we'll see how much of an effort they put out. Goober
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Ed,

Even if Xcel misses a divdend or two, they are making real progress in fixing the deregulated mess. From what I read, they have made good progress on insulating the parent from NRG's credit problems and should they be able to hang on to the NRG assets [i.e. NRG doesn't go bankrupt] then XCEL should be able to easily pay a .75 cent dividend or more. I think that if they can survive the "glut" and maintain these assets, XCEL has a chance earn quite a bit more then it is now. That would do wonders for the share price as well as the ability to pay an increased dividend.

My advise is don't be too disappointed by the delayed dividend. If they miss one or two - which from what they are saying is not what they are planning - that is not all bad if it speeds their recovery.

Andy
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Thanks Andy, I'm still holding hoping for a brighter day at XEL. I don't need to sell and can't use the tax deduction for another year so I'll just wait and see. I know they have been making some progress. Ed
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I'm holding out hope for Xcel as well. I have some experience in the independent power industry, wind generation in particular. I know Xcel is still signing long term contracts for wind projects. Very few companies balance sheet their generating projects, it is simply a more efficient use of capital to leverage debt. So this means that these companies must be able to obtain financing for the projects they are building. This is interesting because typically Power Purchase Agreements require the generator to sell all power produced to the Utility...Xcel in this case. Lenders are usually pretty skittish about financing a project whose sole customer is in trouble. I take this to mean that the financial community has confidence in Xcel's long term stability.

Now growth is another question. Just because the lenders believe that Xcel will be able to pay their bills doesn't really say anything for the long term growth potential. Any thoughts?

Coloraska
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Coloraska ,

You asked:

Just because the lenders believe that Xcel will be able to pay their bills doesn't really say anything for the long term growth potential. Any thoughts?

Growth zfor Xcel is going to come from a rebound in the power demand. In my mind the key driver in Xcel's growth is going to be NRG unit - the current load stone around it's neck. But let me digress from NRG for a moment.

When the economy recovers and demand picks up, more power will be used and Xcel the regulated entityu will generate more power and will sell more power - real basic stuff there so no surprise. This in itself won't really juice Xcel's bottom line but it will provide a decent amount of upside to current earnings - maybe as much as 5-10% more EPS in good quarters. [just a guess on the number by the way based on peak usage a few years ago vs today.]

This minimal growth will happen regardless of NRG but won't be sustainable - i.e. the growth RATE won't be sustainable, the growth will probably stick around as long as the recovery lasts. So when the recovery in demand sets in, Xcel will have a year of nice big year over year returns before it settles back into a slow growth mentality.

The big growth will come from NRG - if they can keep these assets. Right now regulated utes have more capacity then demand - not a good trend for those whose specialty is providing power to those in need. Also a good bit of NRG's power is pre-sold. Pre-selling give some stabilty to the balance sheet while limiting upside [and downside too]. The key issues are 1) how much is pre-sold and how long those contracts last and 2) what can they get for new pre-sold contracts and for what length of time? I don't know the answers to the first and no one can give more then a guestimate for the second. Both will depend on when you are trying to negotiate the contract.

As California demonstrated if the power is hard to get, the cost can be quite high. But either way, NRG is not going to presell all it capacity not even in the best of markets. Too much could go wrong, like a plant could be out of commission and spot market prices are so high that you would lose a ton etc. More over, as good as prices are today they can always be better and finally, pre-sold contracts NEVER max out at the level that the spot market maxes out at. So in effect, if you with hold 20% of your capacity you probably only need to see a small bit at peak times on the spot market to make up for a long term contract for all of it.

But we digress again. The keys for big returns/growth of Xcel will hinge on if it can keep NRG from bankruptcy. Keep the assets and own them when demand recovers and Xcel can earn a nice return. Lose NRG and growth will be modest to minimal.

As an aside, since you asked where the growth will come from, losing NRG would not be terrible for Xcel but it would change the character of it. By that I mean, without NRG, Xcel is stodigy slow growing predictable utility with a decent dividend and limited growth prospects.
Its risk would be in line with say Southern which could provide some pop to the share price short term. [were Xcel to commnad even 25% of Southern's P/E of about 16 the share would be around 14.75 based on '04 est of 1.23 a share. At 16X earnings it would get 19.68 a share.] But it would probably be limited to a max of 5-7% long term growth without taking on more risk.

With NRG there is the potential for much higher EPS maybe even double what it earns today [remember that if NRG could be just break even it would add to Xcel's EPS as the unit is losing money right now.] Assume NRG adds .75 a share in EPS and a P/E of 10 we are at $20.00. make it 12 and we see $24.00. Provide it on a consistent basis and you might even see $30 in 3-4 years.

But like so much owning NRG has its downsides, the biggest being it will make Xcel more risky and volitile. NRG is a commodity seller. This is very cyclical and will provide far bigger swings in Xcel's share price as it will rise and fall with the spot market and the supply/demand curve.

Anyway, those are my thoughts here.

Andy

[Disclosure: As I mentioned on the Energy and Utilities board, I sold my Xcel on or about March 14 of this year to purchase GXP which has a higher dividend and less risk.]
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If its any consolation I just wanted you all to know that I am paying my utility bill to Xcel Energy on time and the cost of electricity with them has gone up.
Ginny
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Thank you for helping my company get back off the canvas so maybe it can get to the next round (if it can take the standing ten count)! Ed
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