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US Electricity
reflecting reduced consumption driven by demand reduction The Rudden Energy Index
and efficiency programs as well as higher prices. The increase Economic times are indeed tough. Fortunately for some, the
in the use of renewable energy is also a contributing factor. regulated utility model is characterised by resistance to
The impacts of GHG awareness and policy changes are downward market trends. This feature is apparent in the stock
apparent. AEO2009 states: “A total of 46 GW of coal-fired prices for energy companies tracked by the Rudden Energy
generating capacity is added from 2007 to 2030 in the Index through 2008. As Figures 8 and 9 illustrate, the
AEO2009 reference case, less than one-half the 103 GW added regulated local and regulated regional companies
in the AEO2008 reference case. Concerns about GHG emissions outperformed both the S&P 500 and the diversified and
significantly slow the expansion of coal-fired capacity in the competitive models.
AEO2009 reference case, even under The Rudden Energy Index consists of
current laws and policies.”
Total electricity consumption
93 energy utility stocks. For
A total of 12.7 GW of new nuclear comparisons, we divide the index into
capacity is predicted along with 3.4 GW
... grows to 4,902 billion kWh
five sub-categories, each indicating a
of uprates from existing plants. After in 2030 strategic bias. These sub-categories are
retirements are taken into account, Regulated Local, Regulated Regional,
112.2 GW will be operational in 2030. Diversified Regulated, Diversified Competitive and Competitive
Being less carbon intensive than coal, natural gas plays a Merchant. Figures 8 and 9 compare the aggregated
larger role in electricity production because new natural gas- performance of the Local, Regional and Diversified Regulated
fired plants are much cheaper than new renewable or nuclear categories versus the performance of Diversified Competitive
plants. Natural gas use for power generation increases by 38% and Merchant categories. Figure 8 shows that the Competitive
over previous projections. A key contributing factor to this Merchant category lost a great deal of momentum as the
increase is a reduction in the growth of coal-fired generation current recession deepened and market confidence eroded.
due to concerns about the impacts of future policies on costs. Figure 9 shows that Diversified Competitive companies started
More than one-half of US states have renewable portfolio the year valued in line with traditional regulated models. The
standards (RPS). The share of generation coming from link was broken as the financial sectors began to unwind and
renewable fuels grows to 14.1% in 2030. reflected the more volatile nature of deregulated holdings.
Total electricity consumption as presented in AEO2009 and
including both purchases from electric power producers and What Does the Industry Think?
on-site generation, grows to 4,902 billion kWh in 2030, As previously mentioned, in the third year of this annual
increasing at an average annual rate of 1%. survey, 501 utility industry participants responded. There was
Figure 8: Regulated Local, Regional & Diversified Figure 9: Regulated Local, Regional & Diversified
vs Competitive Merchant Category Regulated vs Diversified Competitive
Source: SNL Financial Source: SNL Financial
worldPower 2009 33
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