2Q13 Preview.pdf

1
July 19, 2013
ENERGY: Electric Utilities / Multi-Utilities / Gas Utilities
Industry Update / Estimates Change / Price Target Change
KeyBanc
Capital￿Markets

Utilities 2Q13 Earnings Preview
KeyBanc Capital Markets Inc.
Member NYSE/FINRA/SIPC
Paul T. Ridzon: [phone] Ð [e-mail]
Matt Tucker: [phone] Ð [e-mail]
ACTION STATEMENT
On average, we expect that the companies in our coverage universe will report lower 2Q13 quarterly earnings, down 8.0% compared
to 2Q12. Our EPS growth expectations for our coverage universe are for average annual earnings growth of 20 basis points in 2013
and 5.2% in 2014. Our coverage universe currently trades at an average peer group 2014 P/E multiple of 15.8x compared to the
broader market S&P 500 index P/E multiple of 14.4x.
This quarter, we anticipate three potential earnings upside surprises [IDACORP Inc. (IDA-NYSE), NextEra Energy, Inc. (NEE-NYSE),
Pinnacle West Capital Corporation (PNW-NYSE)] and one potential earnings downside surprise [American Electric Power Company,
Inc. (AEP-NYSE)] relative to current consensus expectations. We also highlight ALLETE, Inc (ALE-NYSE), Avista Corporation (AVA-NYSE) and Portland General Electric Company (POR-NYSE) as names to focus on around earnings releases or conference calls due
to Company-specific issues that we feel bear watching.
KEY INVESTMENT POINTS
Preview Focus Names ± We anticipate three potential earnings surprises [IDACORP Inc. (IDA-NYSE), NextEra Energy, Inc.
(NEE-NYSE), Pinnacle West Capital Corporation (PNW-NYSE)] and one potential earnings downside surprise [American Electric
Power Company, Inc. (AEP-NYSE)] relative to current consensus expectations. We also highlight ALLETE, Inc (ALE-NYSE), Avista
Corporation (AVA-NYSE) and Portland General Electric Company (POR-NYSE) as names that may trade around specific issues likely
to be discussed during their company's earnings conference calls. We discuss our focus names in the detailed sections that follow.
Earnings Expectations ± We expect that companies in our coverage universe will generally report lower 2Q13 earnings, down 8.0%.
Our EPS growth expectations for our coverage universe are for average annual earnings growth of 20 basis points in 2013 and 5.2%
in 2014. This quarter, we believe that earnings will primarily be driven by milder weather impacts, merchant headwinds, and higher
non-fuel operating and maintenance expenses, partially offset by rate increases or riders in effect, cost management efforts, and still
sluggish core retail demand growth.
Earnings conference calls this quarter may also be more concentrated on the following themes: spring/summer weather and storm
impacts, low merchant power pricing and hedging updates; regulatory updates; cost management; retail sales trends (with particular
focus on commercial and industrial customers); and the local economies of companies.
Sector Thoughts ± Year-to-date, our sector has underperformed broader market indices, with the Philadelphia Utility Index (UTY)
returning 11.0% compared to the S&P 500 (SPX) index's 18.0% return. More recently, during the quarter ended June 30, the UTY
declined 3.9% vs. an increase of 2.4% for SPX. The recent 2Q underperformance was driven by weakness of larger regulated names.
We attribute this underperformance of the safety plays to recent discussion that monetary policy may drive interest rates higher. Smaller
cap regulated names were the best performing subsector in the quarter, which we believe is the result of the acquisition of NV Energy
by Berkshire Hathaway subsidiary MidAmerican Power. We remain comfortable with our BUY rated names, but believe the sector as
a whole is likely to display continued volatility around shifting views around FOMC policy direction.
Recent Trading Trends Ð More recent (3Q-to-date) performance of the utilities appears to be driven predominately by how investors
view the Fed's bond buying program. We believe the Fed's commentary around its monetary policy has led investors to believe that
bond buying will remain intact until GDP growth stays around 2%. Within our coverage, smaller vertically integrated names have had
average price appreciation of 5.2%, while larger regulated names have returned 4.8%. More merchant exposed names are up 3.1%.
FOR IMPORTANT DISCLOSURES AND CERTIFICATIONS, PLEASE REFER TO PAGE 7 OF THIS NOTE.
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The UTY is up 4.2%, compared to the SPX's 3.4% gain. We believe the out-performance is the result of gaining back ground lost
around FOMC tapering discussions and subsequent language investors conveyed as more dovish.
2Q13 EARNINGS PREVIEW
For 2Q13, we anticipate three potential upside surprises and one potential downside surprise, relative to current consensus
expectations:
Potential Upside Surprises
IDACORP, Inc. (IDA-NYSE; BUY; 2Q estimate of $0.80 vs. $0.71 in 2Q12; consensus is $0.63) ± We have developed a proprietary
model to predict irrigation load based on drought conditions. Our data indicates that 2Q13 was the driest in over 10 years. In addition
to the drought and above normal temperatures, IDA will also benefit from new rates put into place in July 2012, when the Langley
Gulch natural gas plant was placed in service.
NextEra Energy, Inc. (NEE-NYSE; BUY; 2Q estimate of $1.34 vs. $1.26 in 2Q12; consensus is $1.26) ± We expect rider recovery
of growth projects at the Florida utility will more than offset a potential decline in earnings at NextEra Energy Resources (NEER, the
unregulated generation segment). In 2Q12, NEER experienced weaker than normal wind conditions and the Seabrook nuclear plant
was running at reduced capacity (85% of normal).
Pinnacle West Capital Corporation (PNW-NYSE; HOLD; 2Q estimate of $1.18 vs. $1.12 in 2Q12; consensus is $1.07) ± We
expect the 1Q trend of an improving Arizona economy combined with weather on par with a fairly hot 2Q12 will drive earnings above
expectations. Combining a strong 1Q13 with our view for an earnings beat in 2Q13, we would not be surprised if management changed
guidance upward. Our 2013 full-year estimate of $3.65 per share is above the top end of guidance of $3.45-$3.60.
Potential Downside Surprise
American Electric Power (AEP-NYSE; BUY; 2Q estimate of $0.73 vs. $0.77 in 2Q12; consensus is $0.81) ± We expect AEP to
report a down quarter driven by more normal weather after a hot 2Q12, the roll-off of a low tax rate, Ohio customer switching and
lower AFUDC. These negative items will be partially offset by new rates in several jurisdictions.
ISSUES TO WATCH
Company-specific issues that bear further watching include:
ALLETE, Inc. (ALE-NYSE; $55.00 price target) Ð We will be focused on the call for color around the Bison 4 wind project. ALE has
issued a Request for Proposals (RFP) for up to 200 MW of incremental wind capacity. We believe ALE's existing presence bodes well
for a self-build project. We expect an update on any regulatory filings around the project on the 2Q call. Another opportunity for wind
may exist at Allete Clean Energy (the unregulated energy focused subsidiary) to construct wind projects. Projects could be built for
others or the output sold to others under long-term contracts. Additionally, Taconite customers' demand nominations for the balance
of the year are due August 1. Under these nominations, customers indicate their demand under take-or-pay agreements. We expect
demand will remain at or near full capacity, which could alleviate some concerns that steel softness could lead to load reductions. We
continue to believe ALE's Taconite customers are among the low cost producers, and will be among the last to curtail production.
Avista Corporation (AVA-NYSE; HOLD) Ð Throughout 2012 Avista experienced increased operating expenses to drive and support
future business growth in the Ecova segment. As illustrated in 1Q13, AVA appears to have addressed issues. We believe investors will
focus on 2Q13 results for assurance that management has the situation under control. Management has indicated it expects Ecovato
to earn $0.10-$0.14 per share in 2013, with one-third earned in 1H13 and the balance in 2H13.
Portland General Electric Company (POR-NYSE; HOLD) Ð POR issued an 8-K stating two coal-fired generating plants have been
out of service since July 1, 2013 due to equipment failures. We will be focused during the call on commentary regarding the Boardman
plant as POR owns 65% or 374 MWs of capacity and the Colstrip Unit 4 coal-fired plant as POR owns 20% or 148 MWs. Currently,
the Boardman plant will be off-line for at least one month, while the Colstrip plant will be out of service for a minimum of 6 months.
We view both issues negatively as POR jeopardizes crucial August load as well as from increased O&M expenses to get the plants
back online. POR indicated it would revisit 2013 guidance when it reports earnings.
Company NoteJuly 19, 2013
3
PRICE TARGET CHANGES
Given multiple expansion in the group and a more constructive view on fundamentals, we have revisited price targets on some of our
BUY-rated names. We are raising our price target on ALLETE, Inc (ALE-NYSE) from $51.50 to $55. We are raising our price target on
IDACORP Inc. (IDA-NYSE) from $49.50 to $53. We are raising our price target on NextEra Energy, Inc. (NEE-NYSE) from $84 to $88.
ANNUAL ESTIMATE CHANGES
INCREASES
Idacorp Inc. (IDA-NYSE; BUY) ± We are raising our 2013 EPS estimate to $3.30 from $3.25 per share. Our proprietary model
indicates IDA will experience robust power demand from its irrigation customers. Farmers in Idaho pump water from the rivers up to
the plains, where their farms are located. While 2Q12 saw strong irrigation demand, 2Q13 appears to have been somewhat hotter
and dryer.
NV Energy (NVE-NYSE; HOLD) ± We are increasing our 2013 earnings estimate to $1.30 from $1.25 per share. Our weather
data shows Las Vegas experienced weather roughly equivalent to 2Q12, which was $0.05 above normal. Additionally, the first two
weeks of July were hotter than normal.
DECREASES
Avista Corp. (AVA-NYSE; HOLD) ± We are lowering our 2013 EPS estimate to $1.75 from $1.80 due to the unplanned outage at
the Colstrip Unit 4 coal plant. The outage is expected to increase AVA's purchased power costs. The plant tripped offline on July 1 and
is expected to be out of service for roughly six months. AVA does not have a straight pass-through of power supply costs.
Portland General Electric Company (POR-NYSE; HOLD) ± Similar to AVA, POR is exposed to the Colstrip 4 outage. Additionally,
POR is a partial owner of the Boardman plant, which is expected to be out of service for one month after tripping offline on July 1. As
such, we have reduced our 2013 estimate to $1.85 from $1.95 per share.
Price Target Changes
Company Ticker 2013E
Current
Price
Target
Prior Price
Target
Allete Inc.ALE $2.75 $55.00 $51.50
IDACORP IDA $3.30 $53.00 $49.50
NextEra Energy,Inc.NEE $4.95 $88.00 $84.00
Source:KeyBanc Capital Markets Estimates
Valuation Table for Companies with Estimate or Price Target Changes
Company Ticker Rating
2013E
EPS 2013 P/E
Price Tgt
P/E
Price
Target
Allete Inc.ALE Buy $2.75 19.2x 20.0x $55.00
Avista Corp.AVA Hold $1.75 16.3x N/A N/A
IDACORP IDA Buy $3.30 15.7x 16.1x $53.00
NextEra Energy,Inc.NEE Buy $4.95 17.2x 17.8x $88.00
NV Energy NVE Hold $1.30 18.2x N/A N/A
Portland General Electric POR Hold $1.85 17.3x N/A N/A
KBCM Utility Peer Group Average Multiple =16.7x
Source:KeyBanc Capital Markets Estimates
INVESTMENT OPINION
The following tables outline our 2Q13 operating earnings estimates and 2Q13 weather data with estimated EPS impacts for electric
utility companies under coverage:
2Q13 EPS ESTIMATES
See the end of our 2Q13 Earnings Preview for 2Q13 EPS estimates.
Company NoteJuly 19, 2013
4
2Q13 COOLING DEGREE DAYS DEVIATION AND ESTIMATED EPS IMPACT
2Q13 weather data proved to be of somewhat limited value in predicting earnings impact. Heating degree days were generally higher
early in the quarter, while cooling degree days late in the quarter tended to be lower than the prior year period. This made estimating
the net impact of these opposing drivers rather challenging. As such, this quarter we have lower confidence than we generally have
when estimating the earnings impact of weather.
Company Ticker
2Q13 vs
Normal
2Q13 vs
2Q12
Estimated Same
Qtr YOY EPS
Impact
Ameren Corp.AEE 16.6 %(23.9)%($0.05)
American Electric Power,Inc.AEP 24.0 %(15.1)%($0.05)
CMS Energy Corp.CMS 25.7 %(29.5)%($0.03)
Cleco Corp.CNL 4.2 %(14.9)%($0.01)
Duke Energy,Inc.DUK 9.8%(13.9)%($0.03)
Exelon Corp.EXC 19.3 %(28.7)%($0.03)
Great Plains Energy GXP 1.1 %(37.0)%($0.13)
Idacorp IDA 53.2%20.1%$0.08
NV Energy NVE 38.71%-0.21%($0.01)
Northwestern Corp.*NWE 9.3%36.6%$0.03
Otter Tail Corp.*OTTR 4.5%32.7%$0.04
Pinnacle West Capital Corp.PNW 31.4 %0.7 %($0.02)
Pepco Holdings,Inc.POM 52.2 %0.8 %$0.00
Southern Company SO 5.4 %(17.0)%($0.01)
Wisconsin Energy Corp.WEC 7.7 %(49.5)%($0.02)
Xcel Energy,Inc.XEL 27.4 %(27.5)%($0.01)
*Data is Heating DegreeDays Data
Source:National Oceanicand Atmospheric Administration(NOAA),KeyBancCapital Markets Est.
Most companies give their earnings guidance using the assumption of normal weather in their territories. Temperature is an
uncontrollable variable for utility companies and can have a material impact on earnings when the deviation from normal is significant.
Our intention in developing this research product is to give investors a look at potential earnings variability so that they can adjust
their expectations. We believe that this incremental information will allow investors to capture value by responding to potential market
overreaction to earnings surprises induced by a factor beyond management control. Favorable weather in a peak month can materially
raise a company©s earnings for a quarter, inflating the company©s perceived performance and presenting a sell opportunity. The reverse
is true for poor weather, which can make an otherwise successful quarter end with lower earnings than expected. Year-over-year
weather comparisons are also useful for noting where an earnings shortfall or uptick may take place for a utility.
Our data is presented as a percentage differential between normal and the previous year©s heating or cooling degree-days. The
magnitude of the numbers can be misleading, in our opinion, depending on the normal temperature of the territory. A 10% increase
in cooling degree-days in a historically warm climate may be significant, while a 100% increase in heating degree-days in the same
climate can, in fact, be very small.
The data included in this report is an approximation, based on heating and cooling degree-day totals taken from cities within each
company©s service territory. The weighting of the territories is based upon our assumptions of customer distribution within each
company©s service territory and may differ from actual company data. The per share impact of weather is an estimate based on previous
year impacts given by the company and our estimates on weather deviation from normal and prior-year periods. We continuously fine-
tune and calibrate our models in an effort to maintain and improve the accuracy of our forecasts.
BACKGROUND ON DEGREE DAYS
A degree day is the variation of the daily average temperature from 65 degrees Fahrenheit. Heating degree days relate to temperatures
below 65 degrees, while cooling degree days are for average temperature above this temperature. As an example, if the average
temperature over the course of a 24- hour day were 70-degrees, this would equate to five cooling degree days. Conversely, an average
60- degree temperature day would be five heating degree days.
Company NoteJuly 19, 2013
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Cur Prv Cur Prv FC FC Current EPS Previous EPS
Sym Rtg Rtg Target Target 2013 2014 2012 2013 2014 2012 2013 2014
AEE HOLD HOLD NA NA $2.10 $2.29 $2.42 $2.10 $2.30 $2.42 $2.10 $2.30
AEP BUY BUY $51.50 $51.50 $3.15 $3.31 $3.09 $3.10 $3.30 $3.09 $3.10 $3.30
ALE BUY BUY $55.00 $51.50 $2.75 $3.06 $2.58 $2.75 $3.05 $2.58 $2.75 $3.05
AVA HOLD HOLD NA NA $1.80 $1.86 $1.40 $1.75 $1.85 $1.40 $1.80 $1.85
CMS BUY BUY $30.00 $30.00 $1.65 $1.75 $1.55 $1.65 $1.75 $1.55 $1.65 $1.75
CNL BUY BUY $49.00 $49.00 $2.52 $2.74 $2.46 $2.55 $2.75 $2.46 $2.55 $2.75
CNP BUY BUY $28.00 $28.00 $1.22 $1.31 $1.25 $1.22 $1.34 $1.25 $1.22 $1.34
D HOLD HOLD NA NA $3.35 $3.55 $3.05 $3.35 $3.55 $3.05 $3.35 $3.55
DTE HOLD HOLD NA NA $4.08 $4.29 $3.94 $4.00 $4.30 $3.94 $4.00 $4.30
DUK HOLD HOLD NA NA $4.33 $4.57 $4.32 $4.35 $4.55 $4.32 $4.35 $4.55
ED HOLD HOLD NA NA $3.79 $3.84 $3.73 $3.80 $3.85 $3.73 $3.80 $3.85
ETR HOLD HOLD NA NA $4.95 $5.06 $6.23 $4.85 $5.15 $6.23 $4.85 $5.15
EXC HOLD HOLD NA NA $2.49 $2.33 $2.85 $2.55 $2.35 $2.85 $2.55 $2.35
FE HOLD HOLD NA NA $3.01 $3.00 $3.34 $3.00 $3.05 $3.34 $3.00 $3.05
GXP HOLD HOLD NA NA $1.57 $1.63 $1.35 $1.60 $1.65 $1.35 $1.60 $1.65
IDA BUY BUY $53.00 $49.50 $3.30 $3.40 $3.37 $3.30 $3.40 $3.37 $3.25 $3.40
MDU BUY BUY $29.00 $29.00 $1.36 $1.49 $1.15 $1.42 $1.52 $1.15 $1.42 $1.52
NEE BUY BUY $88.00 $84.00 $4.94 $5.30 $4.57 $4.95 $5.30 $4.57 $4.95 $5.30
NI BUY BUY $32.00 $32.00 $1.55 $1.67 $1.46 $1.55 $1.65 $1.46 $1.55 $1.65
NVE HOLD HOLD NA NA $1.30 $1.36 $1.35 $1.30 $1.35 $1.35 $1.25 $1.35
NWE HOLD HOLD NA NA $2.51 $2.69 $2.22 $2.45 $2.70 $2.22 $2.45 $2.70
OTTR HOLD HOLD NA NA $1.41 $1.53 $1.31 $1.45 $1.53 $1.31 $1.45 $1.53
PNW HOLD HOLD NA NA $3.60 $3.72 $3.50 $3.65 $3.75 $3.50 $3.65 $3.75
POM HOLD HOLD NA NA $1.13 $1.24 $1.21 $1.15 $1.20 $1.21 $1.15 $1.20
POR HOLD HOLD NA NA $1.90 $2.08 $1.87 $1.85 $2.05 $1.87 $1.95 $2.05
PPL HOLD HOLD NA NA $2.31 $2.15 $2.42 $2.40 $2.15 $2.42 $2.40 $2.15
SO HOLD HOLD NA NA $2.76 $2.88 $2.68 $2.80 $2.90 $2.68 $2.80 $2.90
SWX HOLD HOLD NA NA $2.91 $3.05 $2.86 $2.85 $2.97 $2.86 $2.85 $2.97
TE HOLD HOLD NA NA $0.95 $1.13 $1.14 $0.95 $1.15 $1.14 $0.95 $1.15
VVC HOLD HOLD NA NA $1.98 $2.17 $1.96 $1.89 $2.17 $1.96 $1.89 $2.17
WEC HOLD HOLD NA NA $2.44 $2.56 $2.35 $2.45 $2.55 $2.35 $2.45 $2.55
XEL HOLD HOLD NA NA $1.90 $1.99 $1.82 $1.90 $2.00 $1.82 $1.90 $2.00
Company NoteJuly 19, 2013
6
KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC
Electric Utility Research
Second Quarter 2013 Earnings Estimates
Exp.Cons.
Report Est.(b,c)
Company TKR Analyst Rtg P/T Date 13E 12A 13E 12A 2Q13E Old New Old New 2Q13 Expected Drivers
Allete ALE Ridzon Buy $55.00 Buy 1-Aug $0.38 $0.39 $0.38 $0.39 0.41 (4)$2.75 $3.05 O&M timing drive lower results for quarter
Ameren AEE Ridzon Hold Hold 1-Aug $0.50 $0.87 $0.50 $0.73 0.54 (4)$2.10 $2.30 Cooler weather and nuke refuel offset higher rates in Mo.
American Electric Pwr.AEP Ridzon Buy $51.50 Buy 25-Jul $0.52 $0.75 $0.73 $0.77 0.81 (11)$3.10 $3.30 Milder weather, higher taxes and Ohio shopping partly offset by new rates
Avista Corp.AVA Ridzon Hold Hold 7-Aug $0.40 $0.31 $0.40 $0.31 0.38 (5)$1.80 $1.75 $1.85 Return of plants closed in 2Q12 and BPA settlement drive higher earnings
CenterPoint Energy CNP Tucker Buy $28.00 Buy 1-Aug $0.27 $0.29 $0.27 $0.27 0.28 (11)$1.22 $1.34 Cooler weather, first (partial) quarter of MLP operations, lower interest expense
CMS Energy CMS Ridzon Buy $30.00 Buy 25-Jul $0.31 $0.37 $0.31 $0.40 0.35 (7)$1.65 $1.75 Milder weather, storms and roll-off of plant recovery partly offset by higher rates
Cleco Corp.CNL Ridzon Buy $49.00 Buy 1-Aug $0.64 $0.77 $0.64 $0.77 0.67 (5)$2.55 $2.75 Rate increase offset by weather and higher costs
Consolidated Edison ED Ridzon Hold Hold 1-Aug $0.56 $0.73 $0.56 $0.61 0.57 (8)$3.80 $3.85 Cost pressures without rate relief present challenging quarter
DTE Energy DTE Ridzon Hold Hold 26-Jul $0.77 $0.86 $0.77 $0.86 0.78 (7)$4.00 $4.30 Cooler summer weather partly offset by new gas rates
Dominion Resources D Ridzon Hold Hold 6-Aug $0.63 $0.45 $0.63 $0.59 0.66 (10)$3.35 $3.55 Millstone nuclear outage results in lower earnings
Duke Energy DUK Ridzon Hold Hold 7-Aug $0.95 $0.99 $0.95 $1.02 0.97 (9)$4.35 $4.55 Milder weather, higher costs and commodity exposure offset Progress contribution
Entergy ETR Ridzon Hold Hold 30-Jul $0.91 $2.06 $1.00 $2.11 1.37 (10)$4.85 $5.15 Prereleased 2Q results on July 16
Exelon EXC Ridzon Hold Hold 31-Jul $0.57 $0.33 $0.57 $0.61 0.54 (13)$2.55 $2.35 Commodity and capacity markets drive lower earnings
First Energy FE Ridzon Hold Hold 6-Aug ($0.27)$0.45 $0.52 $0.60 0.53 (9)$3.00 $3.05 One fewer nuke outage offset by lower power and capacity pricing
Great Plains Energy GXP Ridzon Hold Hold 8-Aug $0.39 $0.41 $0.39 $0.41 0.40 (6)$1.60 $1.65 New rates offset by more normal weather and higher share count
IDACORP IDA Ridzon Buy $53.00 Buy 1-Aug $0.80 $0.71 $0.80 $0.71 0.63 (1)$3.25 $3.30 $3.40 Langley Gulch plant in rates and hot dry weather drive irrigation load
MDU Resources MDU Tucker Buy $29.00 Buy 31-Jul $0.24 $0.29 $0.24 $0.18 0.25 (5)$1.42 $1.52 Higher oil prod. (impacted by weather?), Construction recovery, higher int. exp.
NV Energy NVE Ridzon Hold Hold 26-Jul $0.28 $0.29 $0.28 $0.29 0.24 (7)$1.25 $1.30 $1.35 Comparable weather to strong 2Q12
NextEra Energy NEE Ridzon Buy $88.00 Buy 30-Jul $1.34 $1.45 $1.34 $1.26 1.26 (11)$4.95 $5.30 New regulated assets partly offset by weaker results at unregulated segment
NiSource NI Ridzon Buy $32.00 Buy 31-Jul $0.24 $0.23 $0.24 $0.22 0.23 (6)$1.55 $1.65 New rates partly offset by dilution and sale of retail segment. 2H to show growth
Northwestern Corp.NWE Ridzon Hold Hold 25-Jul $0.29 $0.31 $0.29 $0.31 0.31 (3)$2.45 $2.70 Lower costs and better weather offset by plant outage timing
Otter Tail Corp.OTTR Tucker Hold Hold 5-Aug $0.29 ($0.48)$0.29 $0.19 0.26 (4)$1.45 $1.53 Weather benefit for Electric, improved Construction execution, lower int. expense
PPL Corp.PPL Ridzon Hold Hold *29-Jul $0.49 $0.46 $0.49 $0.51 0.45 (10)$2.40 $2.15 Rate increases offset by share count and weaker merchant results
Pepco Holdings POM Ridzon Hold Hold 7-Aug $0.24 $0.27 $0.24 $0.25 0.24 (6)$1.15 $1.20 Higher regulated on new rates, lower unregulated on closing LILO business
Pinnacle West Capital Corp.PNW Ridzon Hold Hold 2-Aug $1.18 $1.11 $1.18 $1.12 1.07 (10)$3.65 $3.75 Hot weather and continued load growth drive earnings higher
Portland General Electric POR Ridzon Hold Hold 2-Aug ($0.16)$0.34 $0.34 $0.34 0.35 (6)$1.95 $1.85 $2.05 Milder weather offset by lower debt costs
Southern Company SO Ridzon Hold Hold 31-Jul $0.70 $0.71 $0.70 $0.69 0.68 (12)$2.80 $2.90 New Georgia rates partly offset by milder weather
Southwest Gas Corp.SWX Tucker Hold Hold 6-Aug $0.12 ($0.08)$0.12 ($0.04)0.12 (3)$2.85 $2.97 Improved Construction execution, lower interest expense
TECO Energy TE Ridzon Hold Hold 1-Aug $0.24 $0.34 $0.24 $0.34 0.26 (5)$0.95 $1.15 Lower Tampa Electric, coal pricing down and sale of Guatemala assets
Vectren Corp.VVC Tucker Hold Hold 31-Jul ($0.03)$0.31 $0.30 $0.31 0.30 (6)$1.89 $2.17 Coal Mining losses, lower interest expense, ProLiance disposition
Wisconsin Energy WEC Ridzon Hold Hold 31-Jul $0.47 $0.51 $0.47 $0.51 0.46 (8)$2.45 $2.55 Tax timing and lower AFUDC on pollution control equipment
Xcel Energy XEL Ridzon Hold Hold 1-Aug $0.39 $0.38 $0.39 $0.38 0.38 (8)$1.90 $2.00 New rates in several states partly offset by higher expenses, storms
n/e = not estimated
(a) Excludes one-time nonrecurring extraordinary items
(b) Source: FirstCall
(c) Number of analyst estimates
* Earnings expected during Week indicated
Source: KeyBanc Capital Markets Inc. Estimates
Reported
2Q EPS
Operating
2Q EPS (a)2014E2013E
Annual EPS
Company NoteJuly 19, 2013
7
KeyBanc Capital Markets Inc. Disclosures and Certifications
Important disclosures for the companies mentioned in this report can be found at https://key2.bluematrix.com/sellside/
Disclosures.action.
Please refer to the analysts© recently published reports for company-specific valuation and risks.
Reg A/C Certification
The research analyst(s) responsible for the preparation of this research report certifies that:(1) all the views expressed in
this research report accurately reflect the research analyst©s personal views about any and all of the subject securities or
issuers; and (2) no part of the research analyst©s compensation was, is, or will be directly or indirectly related to the specific
recommendations or views expressed by the research analyst(s) in this research report.
Rating Disclosures
Distribution of Ratings/IB Services Firmwide and by Sector
KeyBanc Capital Markets
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]227 44.42 50 22.03
HOLD [HOLD]273 53.42 62 22.71
SELL [UND]11 2.15 4 36.36

ENERGY
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]29 43.28 18 62.07
HOLD [HOLD]38 56.72 16 42.11
SELL [UND]0 0.00 0 0.00

Rating System
BUY - The security is expected to outperform the market over the next six to 12 months; investors should consider adding the
security to their holdings opportunistically, subject to their overall diversification requirements.
HOLD - The security is expected to perform in line with general market indices over the next six to 12 months; no buy or sell
action is recommended at this time.
UNDERWEIGHT - The security is expected to underperform the market over the next six to 12 months; investors should
reduce their holdings opportunistically.
The information contained in this report is based on sources considered to be reliable but is not represented to be
complete and its accuracy is not guaranteed. The opinions expressed reflect the judgment of the author as of the
date of publication and are subject to change without notice. This report does not constitute an offer to sell or a
solicitation of an offer to buy any securities. Our company policy prohibits research analysts and members of their
families from owning securities of any company followed by that analyst, unless otherwise disclosed. Our officers,
directors, shareholders and other employees, and members of their families may have positions in these securities and
may, as principal or agent, buy and sell such securities before, after or concurrently with the publication of this report.
In some instances, such investments may be inconsistent with the opinions expressed herein. One or more of our
employees, other than the research analyst responsible for the preparation of this report, may be a member of the Board
of Directors of any company referred to in this report. The research analyst responsible for the preparation of this report is
compensated based on various factors, including the analyst©s productivity, the quality of the analyst©s research and stock
recommendations, ratings from investor clients, competitive factors and overall Firm revenues, which include revenues
derived from, among other business activities, the Firm©s performance of investment banking services. In accordance with
industry practices, our analysts are prohibited from soliciting investment banking business for our Firm.
Investors should assume that we are seeking or will seek investment banking or other business relationships with the
company described in this report.
Company NoteJuly 19, 2013