A look back at successes and setbacks in the energy industry.
Highs
MDU RESOURCES — MDU Resources Group Inc. announced Nov. 21 that its board of directors has directed senior management to explore potential reorganization into a holding company. The plan is to make MDU Resources' divisions, Montana-Dakota Utilities Co. and Great Plains Natural Gas Co., into subsidiaries of the holding company. "We expect a reorganization would make it easier to transact business in a number of areas, including regulatory matters, risk management and debt financing," President and CEO David Goodin said in the company's news release. MDU Resources also unveiled a $2.32 billion capital plan for 2018 through 2022. The five-year CapEx plan calls for investments of $891 million in the natural gas distribution business, $617 million in the electric business, $466 million in the construction materials and services segment and $349 million in the pipeline and midstream business.
KEYSTONE XL — TransCanada Corp.'s Keystone XL crude oil pipeline secured its last major approval nearly a decade after the project was proposed. The Nebraska Public Service Commission on Nov. 20 voted 3-2 in favor of the mainline alternative route for the 36-inch-diameter border-crossing pipeline to transport crude oil from Canada's tar sands to Nebraska and ultimately the Gulf Coast. The commission's approval comes after the U.S. State Department in March approved the C$8 billion pipeline project. However, there is an open question on whether TransCanada will build the pipeline after weighing legal, commercial and new regulatory risks. "Pipeline construction would negatively affect TransCanada's business risk profile through increased project execution risk, and would likely put pressure on financial metrics," Gavin MacFarlane, a vice president in Moody's Toronto office, said in a Nov. 20 note.
Between
KENTUCKY POWER — American Electric Power Co. Inc. subsidiary Kentucky Power Co. announced Nov. 22 that it reached a settlement with the majority of intervenors that will decrease the utility's revenue requirement to $34.7 million from the original request of $69.6 million. Kentucky Power lowered its rate request in August to $63.3 million after refinancing certain long-term debts. The Kentucky Attorney General's Office of Rate Intervention and the Kentucky Commercial Utility Customers did not sign the agreement, according to a news release. Under the terms of the agreement, Kentucky Power will be able to recover 80% of its mandatory federal transmission expenses. Meanwhile, the utility agreed to not increase its general base rates until 2021.
Lows
SCANA — South Carolina lawmakers are moving forward with efforts to eliminate SCANA Corp.'s cost recovery for the failed V.C. Summer nuclear plant expansion. The South Carolina House Judiciary Committee on Nov. 21 passed several bills designed to protect ratepayers from billions in sunk costs tied to the scrapped reactors and to reform state regulatory oversight. The legislation could add up to $445 million a year in lost revenue for SCANA with the potential for the company to lose more revenue through customer refunds. SCANA's proposed plan to compensate ratepayers for the abandoned project appeared to fall short with Wall Street and lawmakers.
WESTMORELAND COAL — Westmoreland Coal Co.'s stock has taken a significant hit in recent weeks amid increased credit concerns. In addition, S&P Global Ratings lowered its corporate credit rating on Westmoreland from CCC+ to CCC on Nov. 16 with a "negative" outlook. The downgrade reflects operating challenges including contract terminations, low realized prices due to the decline in demand for coal-fired power generation, competition from natural gas and mild weather. "There are significant headwinds. We've noticed a drop-off in contracts in the next 12 months and flat or declining prices. Basically, there's not really an upside in our base case scenario," S&P Global Ratings analyst Vania Dimova said in an interview. The rating agency also believes that Westmoreland's liquidity is less than adequate, compounded by the company's "weak standing in the credit markets."
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.
