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WIKI ANALYSIS
"Pepco Holdings", Inc (NYSE:POM) (also known as PHI) is a public utilities holdings company which generate and distributes electricity and natural gas to mainly 1.8 million residential, commercial and industrial customers in Maryland and Washington D.C.[1]
On 5 January 2009, POM subsidiaries, Pepco Energy Services, was awarded a $5 billion contract from the U.S. Department of Energy.[2] In the contract, Pepco Energy will design and construct new cost saving projects for government facilities. The improvements are projected to generate savings sufficient to pay for their own projects over the term of the contract and lower operating cost.[3]
Company Overview
POM's 2 principal business operations are Power Delivery and Competitive Energy. Power Delivery business is engaged in transmission, distribution and supply of electricity. Where else, Competitive Energy business is engaged in the generation of electricity and marketing of electricity and natural gas, and related energy management services, in the mid-Atlantic region.
Business & Financial Metrics[4]
In 2009, POM generated a net income of $235 million on total revenues of $9.26 billion. This represents a 21.7% decrease in net income on a 13.5% drop in total revenues from 2008, when the company earned $300 million on revenues of $10.70 billion.
Business Segments[5]
Pepco Holdings’ has four Business Segments. They are Power Delivery, Conectiv Energy, Pepco Energy services, and other Non-regulated services.
- Power Delivery (53.8% of 2009 revenue) - Power Delivery consists of transmission, distribution and supply of electricity. Power Delivery is Pepco Holdings' main source of revenue and profit.[6]
- Conectiv Energy (23.4% of 2009 revenue) - Conectiv Energy provides wholesale electric power, capacity, and ancillary services in the wholesale markets and also supplies electricity to other wholesale market participants under long- and short-term bilateral contracts. They do not participate in the retail competitive power supply market.[7]
- Pepco Energy Services (25.7% of 2009 revenue) - Pepco Energy Services provides energy supply to commercial, industrial, and government customers.[8]
- Other Non-regulated services (0.6% of 2009 revenue) - Through its subsidiary, Potomac Capital Investment Corporation (PCI), POM maintains a portfolio of cross-border energy sale-leaseback transactions --transaction wherein the owner of a property sells a property and then leases it back.[9]
Key Trends and Forces
Pepco Energy Services Awarded $5 Billion Master Contract by U.S. Government
On 5 January 2009, POM subsidiary, Pepco Energy Services, was awarded a 5 year contract which is worth $5 billion contract from the U.S. Department of Energy.[10] It is part of an effort to improve energy efficiency, renewable energy and water-conservation projects at federal government buildings. In the contract, Pepco Energy will design and construct new cost saving projects for government facilities. The improvements are projected to generate savings and accrued additional saving to POM.[11]
PHI and its subsidiaries are subject to regulatory treatment
POM’s Power Delivery businesses are subject to regulation by various regulatory agencies that significantly affects their operations. In addition, the rates that POM can charge for electricity transmission and natural gas transportation are regulated by Federal Energy Regulatory Commission (FERC). The companies cannot change without the approval by the applicable regulatory authority.[12]
Competition
The Utilities industry located in the mid-Atlantic region are characterized by intense competition at both the wholesale and retail levels. The nature of the industry is unregulated. At the wholesale level, Conectiv Energy and Pepco Energy Services compete with numerous non-utility generators. At the retail level, Pepco Energy Services competes with numerous competitive energy marketers and other service providers. They compete based on price and the range of services offered to customers.[13]
- Allegheny Energy (AYE) engages in the ownership and operation of electric generation facilities and delivers electric services to customers mainly in Pennsylvania, West Virginia, Maryland, and Virginia. In addition, they operate in two segments, Delivery and Services, and Generation and Marketing.[14] AYE's most important business segment is Delivery and Services segment.[15]
- Constellation Energy Group (CEG) supplies energy products and services to wholesale customers, and retail commercial, industrial, and governmental customers in North America. It primarily operates in three segments. They are Merchant Energy, Regulated Electric, and Regulated Gas.[16] CEG's most important business segment is distribution of Merchant Energy.[17]
- Public Service Enterprise Group (PEG) through its subsidiaries, engages in the transmission, distribution, and sale of electric energy and natural gas to commercial, residential, and industrial customers primarily in the Northeastern and Mid Atlantic United States. The most important business segment of PEG is Public Service Electric and Gas Company (PSE&G).[18]
References
- ↑ ROP 2007 10-K, Part I, Item 1, "Business", Page 2 and 3.
- ↑ BusinessWeek-Pepco Energy gets $5B contract with Energy Dept.
- ↑ BusinessWeek-Pepco Energy gets $5B contract with Energy Dept.
- ↑ POM 2009 10-K pg. 38
- ↑ 5.0 5.1 POM 2009 10-K pg. 154
- ↑ ROP 2007 10-K, Part I, Item 9, "Changes in and Disagreements With Accountants on Accounting and Financial Disclosure", Page 176.
- ↑ ROP 2007 10-K, Part I, Item 1, "Business", Page 10.
- ↑ ROP 2007 10-K, Part I, Item 1, "Business", Page43.
- ↑ ROP 2007 10-K, Part I, Item 1, "Business", Page 13.
- ↑ BusinessWeek-Pepco Energy gets $5B contract with Energy Dept.
- ↑ BusinessWeek-Pepco Energy gets $5B contract with Energy Dept.
- ↑ ROP 2008 10-Q, Part I, Item 1A, "Risks Factors", Page 20.
- ↑ Segment1 ROP 2007 10-K, Part I, Item 1, "Business", Page 16.
- ↑ Segment1 ROP 2007 10-K, Part I, Item 6, "Selected Financial Data", Page 58.
- ↑ Segment1 ROP 2007 10-K, Part I, Item 8, "Financial Statements And Supplementary Data", Page 146.
- ↑ ROP 2007 10-K, Part I, Item 6, "Selected Financial Data", Page 29.
- ↑ #Segment1 ROP 2007 10-K, Part I, Item 6, "Business", Page 2.
- ↑ #Segment1 ROP 2007 10-K, Part I, Item 8, "Financial Statements and Supplementary Data", Page 167.
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