Barclays on Power & Utilities: Weekly Preview
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Rating Summary:
0 Buy, 2 Hold, 4 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Barclays on Power & Utilities: Weekly Preview
Barclays analyst said, "On Thursday at 1:30 PM ET, the Michigan Public Service Commission (MPSC) has a meeting scheduled. While an agenda has not yet been set, we see it as likely that a final order is communicated to DTE's electric subsidiary, Detroit Edison, in their current rate case. Per statute, the MPSC is obligated to render a final decision within 12 months of a rate case filing, making the deadline 10/29/2011."
"While Edison (NYSE: ED) clearly needs to be granted adequate revenues in order to have a fair opportunity to earn their authorized ROE, we view the largest issue in this case coming down to where the MPSC currently sees cost of capital in Michigan. While Detroit Edison is currently authorized an 11.0% ROE, the MPSC staff and ALJ recommended reductions down to 10.15%. Our current '12/'13 EPS estimates of $3.64/$3.90 assume a 10.3% ROE. We see a reasonable band of expectations falling in the 10.3%-10.65% range. If DTE (NYSE: DTE) were to be granted a 10.5% ROE, our view of where market expectations currently fall, our implied '12/'13 EPS would be $3.69/$3.94."
Barclays analyst said, "On Thursday at 1:30 PM ET, the Michigan Public Service Commission (MPSC) has a meeting scheduled. While an agenda has not yet been set, we see it as likely that a final order is communicated to DTE's electric subsidiary, Detroit Edison, in their current rate case. Per statute, the MPSC is obligated to render a final decision within 12 months of a rate case filing, making the deadline 10/29/2011."
"While Edison (NYSE: ED) clearly needs to be granted adequate revenues in order to have a fair opportunity to earn their authorized ROE, we view the largest issue in this case coming down to where the MPSC currently sees cost of capital in Michigan. While Detroit Edison is currently authorized an 11.0% ROE, the MPSC staff and ALJ recommended reductions down to 10.15%. Our current '12/'13 EPS estimates of $3.64/$3.90 assume a 10.3% ROE. We see a reasonable band of expectations falling in the 10.3%-10.65% range. If DTE (NYSE: DTE) were to be granted a 10.5% ROE, our view of where market expectations currently fall, our implied '12/'13 EPS would be $3.69/$3.94."
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