Wednesday, May 31, 2006

Is FPL-Constellation Off?

Constellation Energy Group Inc. (CEG.N: Quote, Profile, Research) on Wednesday said it stopped merger integration planning with fellow utility FPL Group Inc. (FPL.N: Quote, Profile, Research) because of uncertainty about whether Maryland regulators would approve the deal.

Although the merger approval process continues, Constellation said that "in this uncertain climate" it made more sense to focus on day-to-day operations than on the extensive work of planning a combination.

"Stopping integration activity falls short of calling off the merger, but it could be viewed as a step in that direction," Wachovia Securities analyst Samuel Brothwell said in a note.

Mirant Offers $8 Billion for NRG

Mirant Corp. said Tuesday that NRG Energy Inc. has rejected an $8 billion buyout offer, but that it is renewing its bid for the fellow merchant electrical power generator.


From Forbes:

Banc of America initiated coverage on Embarq, the wireline company that was formally spun-off from Sprint Nextel on May 17, with a "buy" rating and $47 price target.

"We believe a combination of selling pressure, conservatism surrounding the new company’s true business trajectory and disappointment regarding management’s resistance to higher equity payouts have depressed near-term valuation," wrote analyst David Barden in a report Tuesday.

Friday, May 26, 2006

NSA Lawsuits May Dissolve

From the Wall Street Journal (subscription):

As lawsuits mount against phone companies from plaintiffs who allege their call records were handed over to the National Security Agency illegally, the companies' defense may benefit from a powerful force: the U.S. government.

The plaintiffs, who accuse Bell phone companies of privacy violations and are seeking billions of dollars in damages, would need to delve into the depths of the NSA's surveillance program to make their cases. But the government considers such information top secret, and legal experts expect the Bush administration to assert the "state secrets" privilege in the 20 or more lawsuits filed by privacy advocates in recent weeks. If judges accept the claim, as has been the case in nearly every instance in which it has been asserted since the early 1950s, the suits will dissolve.

NY Emission Rules

From the New York Times:

Making good on a vow that New York would act on its own if the federal government did not get tough on mercury emissions from coal-fired power plants, Gov. George E. Pataki yesterday proposed one of the most stringent mercury standards in the nation.

Under the draft proposal, New York would cut the level of mercury from electricity-generating stations in half by 2010. By 2015, the new state mercury standard would be toughened further, requiring a 90 percent reduction from current levels.

The state rule would be significantly more restrictive than a federal mercury standard set last year by the Bush administration. Under the federal rule, power plants must decrease mercury emissions 70 percent by 2018. Another major difference is that the federal plan allows generators to trade pollution credits, while New York's does not.

Enron Verdicts & California

LOS ANGELES (MarketWatch)
Former Enron Chairman Ken Lay and former President Jeffrey Skilling may spend decades behind bars for the harm they did to the company's investors, but the two fallen executives are unlikely to face charges for damages the energy-trading behemoth caused in California...

S. David Freeman, who chaired the California Power Authority and headed efforts to probe the crisis, said the litany of wrongdoings by Enron in California is long.

He said the crisis nearly bankrupted the state; forced Pacific Gas & Electric into a bankruptcy from which it emerged in 2004; and, to some extent, brought about the downfall of Davis, likely short-circuiting his higher political ambitions and paving the way for Arnold Schwarzenegger's governorship of the most populous U.S. state.

Along the way millions of ratepayers/taxpayers were stuck with their portions of the tab for drastically costlier power -- with rates often triple what they'd been before the crisis.

The state, itself near bankruptcy's brink, was forced to extend loans to power companies such as PG&E and Southern California Edison so the utilities could stay afloat.

Obstacles to Utility Mergers

Potential buyers of U.S. utilities are likely to tread carefully, with two mergers mired in regulatory issues and/or local politics.

Speaking at the Reuters Global Energy Summit this week, executives and regulators said that while more consolidation is ahead for the industry, companies would have to work carefully to get deals done.

Phone Tax Abolished

From the New York Times:
Bowing to changes in technology and pressure from taxpayers and phone companies, the Treasury Department said yesterday that it would scrap the 108-year-old federal excise tax on long-distance phone calls. The move will bring consumers and businesses about $15 billion in refunds on next year's tax returns.