January 25, 2000
By Jim Brumm
NEW YORK, Jan 25 (Reuters) - The stocks of fuel cell related companies dropped in active trading Tuesday as profit taking caught up with this month's technology high flyers.
The sharp rises started with Plug Power Inc., which began the year trading at 26. It reached a high of 84-3/4 four days later on Jan. 7 -- a price that was exceeded on Jan. 19 when the stock traded as high as 87 on its way to Monday's record 156-1/2. Tuesday it dropped as low as 115 before recovering to close at 131, down 5-1/2, on volume of nearly 2.7 million shares.
Even Mechanical Technology Inc., which gained 12-1/3 Tuesday to close at 65-3/4 on trading of over 1 million shares, was well below its high for the session -- and new all-time high -- of 72-7/8. Mechanical Technology founded Plug Power in May 1997 with DTE Energy Co., which was off 1-13/16 at 35-3/4 in advance of its expected earnings release Wednesday.
The two companies each retain a 32.5 percent interest in Plug Power, which also has attracted investments from General Electric Co. and Sempra Energy -- both of which were fractionally higher Tuesday.
FAC/Equities alternative energy analyst Brian Fernandez estimates there is a $1.0 billion U.S. market for Plug Power's 7 kilowatt fuel cells at a cost per unit of $4,000, adding this puts the market for the units which are expected to go on sale next year at 250,000.
"We think the mass market potential exceeds $100 billion," he wrote in a report this month.
Fernandez believes Plug Power's technology became economically attractive when it "reduced the cost of platinum (in the cell's catalyst) down to $5 per fuel cell."
Platinum producer Johnson Matthey Plc was up 4.25 percent in London trading Tuesday after a 10 percent Monday gain. But the only U.S. producer of platinum group metals, Montana-based Stillwater Mining, eased 5/8 to 33-1/4 Tuesday.
SatCon Technology, which produces Plug Power's energy management controls, remained below Monday's all-time high of 29-15/16, but managed to end Tuesday's session up 3-5/8 at 25-13/16 on trading of 758,000 shares. SatCon is 7 percent owned by DQE Inc., which eased 1/16 to 45 Tuesday after trading at a new high of 53 Monday when ABN AMRO analysts pointed out its SatCon holding was worth $4 per DQE share.
FuelCell Energy , a maker of 250 kilowatt fuel cells selected for installation by the Los Angeles Department of Water and Power, slipped 3 Tuesday and closed at 43.
Canada's Ballard Power Systems, a fuel cell pioneer, also slipped 0.40 in Toronto trading, closing at 93.50.
And Avista, a Spokane, Wash., based utility holding company that joined the fuel cell climb in mid-month slipped 7-3/16 to 46-15/16 on composite trading of 3.2 million shares. It climbed as high as 68 Monday, from 16 on Jan. 11, after Microsoft Chairman Bill Gates purchased a 5 percent of Avista's shares and linked his investment to its fuel cell activities.
Florida Power cuts rates, offers
revenue-sharing to customer
Jim Brumm
New York: The 3.7-million customers of Florida's largest utility are being offered over $1 billion in rate cuts and a unique opportunity to share Florida Power & Light's revenues over the next three years under an agreement reached this week.
Florida Power and Light Co., the main subsidiary of FPL Group Inc., expects the agreement to be approved by the state's Public Service Commission next Tuesday, FPL spokeswoman Stacey Shaw said on Friday in a telephone interview from the utility holding company's headquarters in Juno Beach, Fla., near West Palm Beach. The rate reductions of $350 million in each year of the agreement, if approved, would give virtually all classes of customers the lowest rates of all the major Florida utilities, the utility said in a statement.
The agreement reached with the state's Office of Public Counsel, the Public Service Commission's staff, and two groups of customers - the Florida Industrial Power Users Group and the Coalition for Equitable Rates - settles their concerns about the utility's rates.
"Regulation in Florida works," said FPL Group's President Paul Evanson. "You don't need deregulation to lower rates. We've just proven that." The agreement, which would be effective 30 days after approval, features a special rebate to customers if annual revenues increase due to abnormally high electricity usage by customers, Florida Power & Light said.
FPL's Shaw, noting she is not aware of another utility with a revenue-sharing program, said it is more flexible than a profit-sharing program and eliminates debates over the impact of the company's capital structure on earnings.
The planned revenue sharing would let FPL keep a third of revenues earned in excess of $3.4 billion to $3.56 billion in the first 12 months, while that threshold would change to over $3.45 billion to $3.61 billion in the second 12 months, and over $3.5 billion to $3.66 billion in the third 12 months, Shaw said.
She said the utility's revenues were $3.76 billion last year - out of total FPL Group revenues of $6.66 billion.
Adjusting for last year's heavier-than-normal air conditioning load in South Florida, the utility's 1998 weather-normalized revenues were $3.68 billion, Shaw continued. Taking off the $350 million rate cut leaves the $3.33 billion base for 1999's rates, she added.
The utility said the agreement also would cut its return on equity (ROE) range to 10 per cent to 12 per cent from the current 11 per cent to 13 per cent.
Noting that non-fuel operations and maintenance expenses and financing costs are excluded from the ROE calculation, HSBC Securities analysts said FPL can benefit to the extent it can limit those costs over the settlement's three-year term.