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Tuesday's Energy Stocks: FirstEnergy up with new rate plan; solar equities tumble

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


Tuesday's Energy Stocks: FirstEnergy up with new rate plan; solar equities tumble

TheDow Jones Utility Average posted a marginal gain to end at 660.23 on Tuesday,May 3. FirstEnergy Corp.led sector components, rising 1.54% in heavy trading to $33.56.

FirstEnergy'sOhio utilities have asked stateregulators to approve modifications to their generation rider whileeliminating a power purchase agreement with an unregulated generationaffiliate. The new plan is designed to act as a hedge on 3,200 MW of previouslyrate-based generation, but would not be based on actual plant costs, and theutilities will not sell the output into the PJM Interconnection LLC market.

JefferiesLLC analyst Anthony Crowdell wrote in a May 3 report that the revenue from thisplan "could help improve the parent credit ratios and minimize equityneeds." But more time is needed to see if the Public Utilities Commissionof Ohio will be supportive, he said.

ended 0.13%lower at $78.84 on below-average volume. The company first-quarter 2016earnings estimates, reporting adjusted earnings of $777 million, or $1.13 pershare, compared with $881 million, or $1.24 per share, in the 2015 firstquarter. In a conference call, Duke Energy executives said the potential saleof its international business continues to move forward.

"We'vebegun initial steps in marketing the assets, including signing non-disclosureagreements and providing information to interested parties," Duke EnergyPresident, Chairman and CEO Lynn Good said. "This business includeshigh-quality assets, which we believe will attract significant interest frompotential buyers."

TheSNL Energy Large Diversified Index ended 0.03% lower at 209.85.

Solarstocks were hit hard Tuesday in mixed trading as the Guggenheim Solar ETF fell3.31% to $22.75. First Solar Inc.fell 3.65% to $52.85, CanadianSolar Inc. dipped 5.42% to $16.57, closed down 4.77% at $7.59and SolarCity Corp.tumbled 10.49% to $26.45.

GuggenheimSecurities LLC analyst Sophie Karp on May 3 launched coverage of Sunrun andSolarCity with "buy" ratings.

"Asthe largest players are gaining scale, the next logical step is themonetization of their equity stake in deployed assets, and we think that it iscoming," Karp wrote. "With the public market for Yieldco typestructures in flux, we think residential solar players will try to go down adifferent path and monetize the assets by selling to private investors."

SolarCityon May 3 announcedthat John Hancock Financial has taken a $227 million equity stake in a 201-MWportfolio of diversified solar projects in return for a majority of theprojects' cash flow over a 20-year term. "Cash equity enables SolarCity tomonetize a high percentage of cash flows to maximize upfront financingproceeds," said Radford Small, SolarCity executive vice president ofglobal capital markets, in a news release.

Inthe midstream sector, WilliamsPartners LP shares ended at $28.49, down 7.17% in about averagevolume. Williams Partners is one of the backers of the proposed ConstitutionPipeline, the prospects of which are uncertain following New York's refusal toissue a key water permit for the gas transportation project.

"Fromour perspective, Constitution is significant because it's such a rare thing fora pipeline to be denied a water quality certification," Rob Rains, ananalyst with the policy and financial research firm Washington Analysis LLC,said in a recent interview."This is potentially fatal for the project."

Amongother project backers, Cabot Oil& Gas Corp. fell 1.49% to $23.88, closedat $59.86, down 0.12%, and WGLHoldings Inc. shed 0.51% to $68.38.

TheSNL Midstream Energy Index gave back 2.11% to end at 104.62.

fell 5.19% to$14.62 in light trading, but FBR & Co. analyst Lucas Pipes is bullish onthe company's shares with an outperformrating, noting the company is weathering weak domestic demand for coal byincreasing exports through Baltimore.

"[CONSOL]is attractively valued for an exceptional basket of low-cost energy assets,including top-tier Marcellus and Utica E&P assets, and best-in-classNorthern Appalachian (NAPP) thermal coal. The company has been able to lowerproduction costs substantially, and especially in the dry Utica, we believethat the full potential for further efficiency gains is not appreciated byinvestors," Pipes wrote.

Declineswere seen elsewhere in the sector: CNXCoal Resources LP fell 5.10% to $8.70 and closed1.28% lower at $15.47.

TheSNL Coal Index closed at 49.50, down 3.83%.

Incommodities, June natural gas endedhigher, as a day of sharp losses in the week's opening session gaveway to a modest reversal with the contract settling the session at $2.086/MMBtu,higher by 4.4 cents.

Market prices and indexvalues are current as of the time of publication and are subject to change.