This Quarter's Utility Results Will Show the Wrath of Hurricanes

A resident sweeps grass clippings as a CentruyLink Inc. employee works to restore phone and data service for a neighborhood after Hurricane Irma in Fort Myers, Fla. on, Sept. 13, 2017.

Photographer: Daniel Acker/Bloomberg

For a look at just how much havoc back-to-back hurricanes wreaked upon the U.S. power grid, keep an eye out for third-quarter earnings from utilities.

Entergy Corp. has already said that costs related to Hurricane Harvey will be at the lower end of its initial range. Next up are NextEra Energy Inc. and American Electric Power Co. on Thursday and Duke Energy Corp. next week.

Here are some likely takeaways:

Fixing Grid

While billions invested in hardening the grid in recent years paid off in terms of how quickly the lights were restored, there’s still the question of how much state regulators will allow utilities to collect from customers. Companies will be hoping for favorable treatment given their speedy response. NextEra’s Florida Power & Light utility described the task of getting the lights back on after Hurricane Irma as the biggest restoration effort the company has ever faced. “When you have outages that last for days or a week, you’ve lost sales,” said Chris Ellinghaus, a New York-based analyst for Williams Capital Group. “It’s going to impact a decent number of utilities.”

Weather Impact

While the contiguous U.S. had its 15th warmest summer on records going back to the 1890s, most of that heat was focused in the West. The states in the Lower Mississippi River Valley were cooler than normal while a large swath of the eastern U.S. was near average, according to the National Centers for Environmental Information. That may have a knock-on effect on sales for utilities. “Cooler weather has two separate effects,” said Kit Konolige, a New York-based utility analyst for Bloomberg Intelligence. “The traditional regulated utility sells less power so revenues are lower. For those that sell wholesale electricity, cooler weather means lower prices.”

— With assistance by Brian K Sullivan

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