Key State and Local Elections Could Impact 3 Utilities
We are reaffirming our fair value estimates and moat ratings.
State and local elections on Nov. 3 will have important implications for utilities such as Xcel Energy (XEL), Pinnacle West (PNW) , and Southern Company (SO). We are reaffirming our fair value estimates and moat ratings.
Xcel Energy always faces political and regulatory action in its eight-state service territory. The status quo should support most of its five-year, $22.6 billion investment plan and our 6% annual growth rate. But if Democrats use state and federal power to push clean energy, Xcel's growth could reach the high end of management's 5%-7% target.
In Minnesota, Xcel's largest service territory, Democrats only need to flip two state Senate seats to accelerate a 100% renewable energy standard proposal that Republicans have stalled. This could expand Xcel's five-year $8.4 billion investment plan in the state.
Pinnacle West faces a difficult path in Arizona, an historically challenging jurisdiction. Three of the five state commissioners are up for reelection ahead of rate case hearings set to start in December. The election likely will influence the outcome if hearings drag into 2021. The election might also influence a proposed 100% carbon-reduction standard by 2050 if the current commission don't rule by year-end.
Southern's new nuclear plant in Georgia is on pace to hit its 2021 and 2022 in-service dates, albeit five years behind schedule and at double the cost. The all-Republican Public Service Commission has supported the $20 billion project throughout. But with Democrats challenging for two open PSC seats, Southern might face pushback for further delays.
Xcel's next rate increase in New Mexico might depend on the outcome of the state's Constitutional Amendment 1 vote. If approved, the state commission would change from five elected commissioners to three governor-appointed commissioners, like in most states, in 2023. Xcel implemented new rates in May.
A vote in Boulder, Colorado, might save Xcel from municipalization but lock it into tough clean energy targets.
|Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.|
Travis Miller does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.