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Utilities touch 52-week highs; Central App mines produce 28% less in Q1

Top news

Withfirst-quarter 2016 earnings season winding down, electric utility and power producerstocks hit 52-week highs during the week of May 2. The Dow Jones UtilityAverage and the Philadelphia Utility index rose during the opening days of themonth, while the yield on the 10-year Treasury note declined from 1.88% on May2 to 1.76% on May 5, according to SNL Energy data.

LDCcustomers of the suspended Northeast Energy Direct natural gas pipelineproject said they are working with Kinder Morgan Inc. and other pipeline developers in NewEngland to replace gas transportation capacity they thought they had secured.

Thetop 25 producing mines in Central Appalachia produced 28% less at the end ofthe first quarter of 2016 compared to the prior-year period. Production fromall reporting mines in the basin dove to nearly 82 million tons in the yearpreceding the most recent quarter compared to almost 114 million tons in theprior year, according to U.S. Mine Safety and Health Administration data.


*AES Corp. first-quarter 2016adjusted earnings of 13 cents per share, down 12 cents year over year due inpart to an increase in tax expense and an impact from the devaluation offoreign currencies in Latin America and Europe. The result also was below theS&P Global Market Intelligence normalized EPS consensus estimate of 20cents. The company continues to target full-year 2016 adjusted EPS in the rangeof 95 cents to $1.05.

*Private equity firm RiverstoneHoldings LLC could be nearing a deal for , Bloomberg reportedMay 6, citing unnamed sources. The sources said another bidder could emerge, orTalen could choose to continue operating as a public company, according to thereport.

*NRG Energy Inc. plansto launch a $700 million senior note offering to help fund the repurchaseoutstanding senior debt, according to a company .

*Massachusetts ElectricCo. and NantucketElectric Co., doing business as National Grid, issueda request for power supply proposals for default service in Massachusetts.National Grid is specifically soliciting proposals for 50% load share for eachof the six industrial customer group blocks in the SEMA, WCMA or NEMA standardmarket design load zones for the Aug. 1 to Oct. 31 period. is asubsidiary of NationalGrid plc.

*Following up on its earlier finding that almost a dozen subsidiaries ofSouthern Co. failedto rebut the presumption of market power in several balancing authority areas,FERC announced thatit will hold a technical conference May 23 to discuss "selected issuesrelated to the market-based rate authorization" of those entities.

*Pattern Energy GroupInc. has launched a $200 million at-the-market program and enteredan equity distribution agreement for the sale of its class A common shares fromtime to time, according to a company statement.

*Enel SpA subsidiaryEnel Green Power North AmericaInc. has started construction of a 150-MW solar project inMinnesota. TheAurora utility-scale distributed photovoltaic solar project is estimated tocost about $290 million, and it will sell power to The project willconsist of 16 PV projects, which are expected to go online by the end of thisyear, according to a recent newsrelease.

*Ohio Power Co. hasfiled a registrationstatement on Form S-3 for the potential sale of up to $500 million of itssenior notes. The AmericanElectric Power Co. Inc. subsidiary intends to use net proceeds tofunding its construction program and for other general corporate purposes.

Natural gas/midstream

*Enbridge Inc. islooking to reduce its ownership in the proposed Northern Gateway crude oilpipeline project in a bid to allow First Nation and Metis partners to boosttheir stake in the project to 33% from 10%, Reutersreports. The company also is seeking a three-year extension of from Canada's NationalEnergy Board in order to continue its talks with aboriginal communities thatoppose the project.

* Arenewed forecast of a "lower for longer" commodity price environment hasMoody's again soundingalarms for stressed oil and gas companies. Moody's oil and gasLiquidity Stress Index, measuring distressed debt among speculative-gradeissuers, reached a record 31.6% in March, surpassing the peak levels from the Great Recession.E&P companies saw a record high of 40.5% in April, while the overall oiland gas figure slipped to 29.5%.

*Texas LNG LLC's proposednatural gas liquefaction and export facility in Brownsville, Texas, is facingopposition from environmental groups, the SanAntonio Business Journal reports. The opposing groups have filedmotions and comments with FERC. The project has capacity of up to 4 milliontonnes per annum.

*Halliburton Co. saidit will redeem$2.5 billion worth of senior debt on May 12. The company will redeem its 2.70%notes due March 2020 and 3.375% notes due March 2022 in connection with thetermination of itsmerger agreement with BakerHughes Inc.


*Marking his firstcampaign speech since becoming the presumptive Republican nominee for president, DonaldTrump traveled to Charleston, W.Va., to offer support for the state's ailing coal industry andreceived a warm welcome from the industry's leadership.

*Foresight Energy LP andForesight Energy LLC have secured time until May 17 to woo at least 66.67% ofthe holders of their 7.875% senior notes due 2021 in support of a restructuringagreement that is expected to provide a favorable amendment to thepartnership's credit facility, according to a . 

* Asearnings season continued this week and production for the first quarter of theyear became clear, U.S. coal producers looked ahead at a leaner future and a "permanentlychanged" market landscape. This week, S&P Global Market Intelligencecompiled production data from the country's major producing basins, showinglower overall output at most mines as domestic producers continue to try tocope with oversupply and waning demand at home and abroad.


*The degradation of one of the strongest El Niño events on for La Niñaconditions to take grip of the U.S. by the fall, which could have bullishimplications for natural gas and power markets as early as this summer.

*Following a finish up 2.5 cents in pre-weekend book squaring to a settle at$2.101/MMBtu, June natural gas futures were meandering on either side ofunchanged with littledirection provided by fundamentals. The contract moved as high as$2.108/MMBtu and traded as low as $2.088/MMBtu and was last eyed 0.4 cent lowerat $2.097/MMBtu ahead of the Monday, May 9, open.

*Next-day power markets could open the new workweek with Monday, May 9, session, astraders look to slightly stronger load forecasts on most regional grids.

* during the weekended May 5 as fundamentals continue to weigh on the U.S. thermal coal market.Prices for rail-delivered Central Appalachian coal headed lower, while those ofthe Powder River Basin posted lackluster gains.

New from RRA

*On May 2, after monthsof deliberation, the New Jersey Senate Environment and Energy Committee passedS684 and referred thebill to the Senate Budget and Appropriations Committee.

*According to Regulatory Research Associates, the utility regulatory climate inNew Hampshire is somewhat restrictivefrom an investor perspective.


"We'rejust too small, still today, as an industry to be split apart or to becompeting against each other in the public forum," outgoing Solar EnergyIndustries Association CEO Rhone Resch said on the importance of the solar industry lobbyingwith one voice.

The day ahead

*Early morning futures indicators pointed to a higher opening for the U.S.equity markets. To view more SNL equity market indexes, click here.To view more SNL Energy commodities prices, click here.