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WIKI ANALYSIS
Mirant Corporation (NYSE:MIR) provides electricity to urban areas in the Mid-Atlantic, the Northeast, and California through its 12 power plants, which are capable of producing 10,076 megawatts of electricity.[1] Mirant differs from most electric utility companies in that it does not sell electricity to consumers directly, rather it sells electricity to electric utilities, cities, and large industrial companies. Mirant's core business area is the Boston, New York, and Washington D.C. area, and the utilities that provide direct service to individual customers in those cities have not sufficiently increased their own generation capacity. As a result, they are buying more electricity from third party providers like Mirant.
Mirant had to shut down two of its generating facilities in 2007 due to non-compliance with environmental laws, and the company has spent an additional $1.6 billion to comply with Maryland emissions guidelines. Other states have also passed legislation, requiring Mirant to lower its emissions, leading Mirant to increase the generation capacity while simultaneously lowering the emissions of its existing power plants in Washington, D.C., New York, Boston, and San Francisco. Mirant is also vulnerable to rising fossil fuel costs as all of their plants are powered by fossil fuels and by 2012 only 5% of their fuel supply will be paid through fixed price contracts.
In April of 2010, Mirant announced that it would merge with Reliant Energy to form GenOn Energy.[2] The newly formed company will have nearly 25,000 megawatts of electric generating capacity, making it one of the largest independent power producers in the United States. GenOn will have operations over most of the United States, with its largest generating capacity in the Mid Atlantic and California regions[3].
Company Overview
Business Financials
Mirant expects energy demand to increase the most in Washington, D.C., New York, San Francisco, and Boston from 2008 to 2011, which means Mirant will focus primarily on developing the power plants at those locations with a particular emphasis on San Francisco.
In 2009, Mirant posted total revenues of stock:Mirant_(MIR)/Data/Revenue/2009$2.31 billion, a sharp decline from the previous year's revenues of $3.19 billion in 2008. Unsurprisingly, as a result of this decrease in revenues, its net income dropped significantly as well from $1.26 billion in 2008 to just $434 million in 2009.
Business Segments
Mirant breaks its operations into four segments: i) Mid-Atlantic, ii) Northeast, iii) California, and iv) Other Operations.
Mid-Atlantic (77% of 2009 Revenue, 54% of 2009 Operating Income)
This is the largest of Mirant’s four segments; it has the most generation capacity, makes up the largest portion of revenue, and it is the second largest portion of income from continuing operations. It consists of four generating facilities located in Maryland and Virginia. Mirant has spent $1.6 billion to comply with the Maryland Healthy Air Act emissions standards. In 2009, this segment posted total revenues of $1.78 billion.[4]
Northeast (14% of 2009 Revenue, 6% of 2009 Operating Income)
There are five generating facilities located in Massachusetts and New York that make up this segment. All of the facilities are powered by either natural gas, oil, or diesel, which have volatile prices, and Mirant does not protect itself from these volatile prices by negotiating fixed price contracts. In 2009, this segment had total revenues of $318 million.[4]
California (6% of 2009 Revenue, 1% of 2009 Operating Income)
Mirant expects the largest growth to occur in this segment from 2008-2011. All of this segment’s three generating facilities are located in or near San Francisco. In 2009, this segment earned total revenues of $154 million.[4]
Other Operations (3% of 2009 Revenue, 10% of 2009 Operating Income)
The Other Operations segment is responsible for investing and managing the company’s assets, carbon trading, and negotiating futures contracts for the fossil fuels that Mirant uses at its generating facilities. In 2009, this segment earned $62 million in total revenues.[4]
In the vain of your postings in gvniig credit when credit is due, I think that despite his many flaws Turnball is speaking some sense. Completely understand that this is problematic to the message from the climate change deniers in the Liberal/National parties but seriously it can't be denied it is as expression of what I understand is still policy from the party and clearly the view of the majority of those who study and understand it. As for Baroness Thatcher, if you read comments from her daughter then her well understood health issues started in 2000 so any backtracking on her scientific based position whilst PM of the UK needs to be taken with this in mind. The disgrace that is Lord Monkton (disproven advisor to the Baroness, as well as isn't sitting member of the house of Lords)also needs to be taken into account, those who have some background of rational reasoning are demonised within the Liberal Party and outside. Climate Change and human impct of it is proven, to deny this is unwise.
Competition
Although Mirant does not compete against electric utility companies that sell electricity to consumers, there are other electric utilities that sell electricity wholesale to cities, industrial customers, and other electric utilities with generating facilities in the Northeast, Mid-Atlantic, and California.
- Constellation Energy Group (CEG): Although Constellation Energy Group has the smallest generation capacity of Mirant's competitors, it has the most revenue. CEG operates in central Maryland and has 60% of its generating capacity in nuclear power and only 35% of its generating capacity comes from coal. CEG is better prepared to handle volatile fossil fuel prices than Mirant, but the costs and risks of running nuclear generating facilities are much greater than a traditional coal powered generating facility.
- NRG Energy (NRG): NRG generates more megawatts of electricity and competes with Mirant in more areas than any of Mirant's competitors. NRG has generating facilities in the Northeast and Western regions of the US, and 16% of NRG's generating capacity comes from nuclear power plants.
- Reliant Energy (RRI): Reliant operates primarily in Texas and only competes with Mirant in Maryland and California. Approximately 75% of Reliant's generating capacity comes from coal powered plants, but the company's renewable energy power plants only operate in Texas, which means Reliant is also exposed to volatile fossil fuel prices.
References
- ↑ http://www.wikinvest.com/stock/Mirant_%28MIR%29/Filing/10-K/2010/F47042189#toc17238_3 MIR 10-K 2009 Item 1 Pg. 6]
- ↑ http://dealbook.blogs.nytimes.com/2010/04/11/mirant-and-rri-agree-to-3-1-billion-merger
- ↑ http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100411005036&newsLang=en Mirant and RRI Energy to Merge to Create GenOn Energy - April 2010
- ↑ 4.0 4.1 4.2 4.3 MIR 10-K 2009 Item 1 Pg. 8
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