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The AES Corporation (AES) |
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WIKI ANALYSIS
AES Trust (NYSE: AES) is an electric utility; by megawatts generated, AES is the ninth-largest electricity generator in Brazil and the second-largest in Chile.[1] The company also distributes electricity to about 80% of Brazil's population through its utilities operations.[2] Though AES is based in the U.S., its Latin American businesses consistently account for half the company's revenue.
Business Overview
Business & Financial Metrics[3]
In 2010, AES generated revenues of $16.6 billion. This represents a 19% increase in total revenues from 2009.
Business Segments[4]
Generation (49.3% of total revenue)
The Generation segment is responsible for running electricity generation plants powered by either coal, natural gas, water, biomass, or wind, and selling electricity to wholesale customers in 26 countries. In Latin America, the company's main source of revenue, AES generates 21% of the total electrical capacity in the state of São Paulo, Brazil making it the ninth-largest generator in Brazil.[5] AES also produces 12% of Argentina's total electricity and is the second-largest generator of power in Chile.[6] AES also owns 17 power plants in the northeastern and western U.S.[7]
Utilities (50.7% of total revenue)
The Utilities segment is responsible for transporting electricity directly to over 11 million consumers.[8] The company's Utilities operations range in structure from simple distribution systems to fully integrated utilities that generate, transmit, and distribute power. AES is part owner of Brazil's largest electricity distribution company in terms of revenue and electricity distributed, AES Electropaulo.[9] In El Salvador, AES provides electricity to over 80% of the country's population.[10] In North America, AES owns IPL, a utilities company that supplies energy to roughly 465,000 customers in Indianapolis.[11] The Utilities businesses do not face as much competition as AES' Generation segment because of the government regulation of utilities that prevents competitors from freely entering the market.[12]
Other
The Other segment consists mostly of AES' alternative energy products and services. AES's alternative energy business includes wind-powered electricity generation stations and products designed to reduce the output of greenhouse gases from fossil fuel generators.[13]
Key Trends and Forces
Nationalization in Latin America threatens AES' operations
On January 8, 2007, Hugo Chavez, president of Venezuela, announced a plan to nationalize Venezuela's electrical energy industry.[14] As part of Chavez's plan, AES was forced to sell its Venezuelan electric utilities company EDC to the Venezuelan government for $739 million.[15] The transaction resulted in a $680 million loss on the value of AES's assets in Venezuela.[16] Venezuela is not the only Latin American country to move toward nationalization; Bolivian president Evo Morales nationalized the country's oil and natural gas industries, even going so far as to send in troops to enforce the government's policies.[17]
Competition
- North America
- Constellation Energy Group (CEG) is a U.S. company that offers electric and natural gas utilities services, though this is just one part of its entire business model. Its energy delivery services compete with AES' Utilities segment.[18]
- Dominion Resources (D) generates and distributes electricity and natural gas throughout North America. Dominion competes with both of AES' two main segments.[19]
- Duke Energy Corporation (DUK) distributes natural gas to customers in North America and electricity to both North American and international customers.[20]
- SEMPRA ENERGY (SRE) runs electric and natural gas utilities in North America, competing with AES' Utilities division.[21]
- Latin and South America
- Empresa Nacional de Electricidad S.A. (EOC) runs electricity generation plants in Chile, Argentina, Colombia, Peru, and Brazil.[22]
- Comp En De Mn Cemig ADS (CIG) generates and distributes electricity throughout Latin America.[23]
References
- ↑ AES 2007 10-K: Business, pgs 9
- ↑ AES 2007 10-K: Business, pgs 9
- ↑ AES 2009 10-K pg. 93
- ↑ 4.0 4.1 AES 2009 10-K pg. 108
- ↑ AES 2007 10-K: Business, pg 7
- ↑ [stock:The_AES_Corporation_(AES)/Corporate%20Other | AES 2007 10-K: Business, pg 7 ]]
- ↑ AES 2007 10-K: Business, pg 10
- ↑ AES 2007 10-K: Business, pg 5
- ↑ AES 2007 10-K: Business, pg 5
- ↑ AES 2007 10-K: Business, pg 5
- ↑ AES 2007 10-K: Business, pg 11
- ↑ AES 2007 10-K: Business, pg 5
- ↑ AES 2007 10-K: Business, pgs 5
- ↑ Bureau of International Information Programs: Latin American Nationalization Trend Seen Hindering Progress
- ↑ AES 2007 10-K: Business, pg 5
- ↑ AES 2007 10-K: Risks Associated with our Operations, pg 56
- ↑ PBS: Bolivia Moves to Nationalize Oil and Natural Gas Industries
- ↑ Google Finance: CEG
- ↑ Google Finance: D]
- ↑ Google Finance: DUK]
- ↑ Google Finance: SRE
- ↑ Google Finance: EOC
- ↑ Google Finance: CIG
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