EEI Q3 2010 Financial Updates have been completed for Stock Performance, Dividends, and Rate Case Summary. Below are links to each report and the Q3 2010 highlights:

Stock Performance

Download the Stock Performance report.

• The EEI Index returned 12.5% during Q3, slightly outpacing the Dow Jones Industrials' 11.1% return, the S&P 500's 11.3% return and the Nasdaq Composite's 12.3% gain. This was the second consecutive quarter that the EEI Index outperformed the broad market, reversing the underperformance seen during Q1.
• Regulated companies returned an average 10.5% during the first nine months of 2010 versus the Mostly Regulated group's 7.0% and the Diversified group's negative 4.9%. Dividends boosted regulated shares and weak natural gas prices weighed on competitive generators.
• EEI Index companies averaged a strong 4.5% dividend yield on September 30, two percentage points more than the 10-year Treasury bond's 2.5% yield.
• Electricity demand jumped 6.9% during Q3 due in part to a hotter-than-average summer, and grew 4.5% year-to-year during the first nine months of 2010. Strong capex programs seem likely to produce reasonable earnings growth for many Regulated utilities, contingent upon maintenance of constructive regulatory relationships.

Dividends

Download the Dividends report.

• Three utilities increased their dividend in Q3, producing a total of 26 that increased their dividend during the first nine months of 2010, extending the industry’s six-year trend of widespread increases.
• At September 30, 2010, only one (1.7%) of the 58 publicly traded companies in the EEI Index was not paying a common stock dividend. This is the lowest percentage in our data set (going back to 1988).
• The industry’s average dividend increase during the first nine months of 2010 was 8.8%, with a range of 0.8% to 68.0% and a median of 3.2%. CMS Energy (+68.0% in Q1 and Q3 combined), UniSource Energy (34.5% in Q1), and Avista (+19.0% in Q1) made the largest increases in percentage terms.
• EEI and the utility industry strongly favor extension of the current 15% tax rate on dividends, which is set to expire at year-end. Higher financing costs may disrupt utilities’ plans to make needed capital expenditures, which are also a source of good domestic job creation.

Rate Case Summary

Download the Rate Case Summary report.

• Shareholder-owned electric utilities filed 12 general rate cases in Q3, a number consistent with the trend of rising rate case activity during the past decade.
• The average awarded ROE in Q3, at 10.27%, remained near the bottom of a decade-long downward trend. Falling interest rates have played the primary role in the decline. Other likely factors include increased use of riders and adjustment clauses and regulators' attempts to hold down rate increases during difficult economic times.
• Regulatory lag, at an average of 12.4 months in Q3, was the highest in five years.
• Legislatures and commissions should continue to allow utilities to implement rate mechanisms that reduce regulatory lag. However, these come with their own sets of risks and commissions should not be too quick to reduce allowed ROEs as a result of them.

EEI Staff Contacts

• Mark Agnew
  Director, Financial Analysis
  Edison Electric Institute
  202-508-5049
  magnew@eei.org
• Aaron Trent
  Manager, Financial Analysis
  Edison Electric Institute
  202-508-5526
  atrent@eei.org 
• Erin Hailes
  Financial Assistant
  Edison Electric Institute
  202-508-5419
  ehailes@eei.org