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1.47 MB
Extraction Summary
2
People
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Organizations
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Locations
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Events
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Relationships
4
Quotes
Document Information
Type:
Financial white paper / investment report
File Size:
1.47 MB
Summary
This document is page 8 of a confidential 'Global Utility White Paper' produced by Electron Capital Partners, LLC, specifically watermarked for the exclusive use of Jeffrey Epstein. The document, dated around February 2013, analyzes the US utility market, arguing for opportunities in non-regulated power generation assets due to natural gas prices. It lists various structural changes in the US market, such as coal retirements, Obama's climate initiatives, and the shale gas boom, that create long/short investment opportunities.
People (2)
| Name | Role | Context |
|---|---|---|
| Jeffrey Epstein | Recipient/Client |
Name appears in watermark 'For exclusive of Jeffrey Epstein', indicating he was the intended recipient of this confid...
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| Barack Obama | Politician (US President) |
Referenced in bullet point regarding 'Obama initiatives on climate change legislation'.
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Organizations (6)
| Name | Type | Context |
|---|---|---|
| Electron Capital Partners, LLC |
Investment firm responsible for the white paper.
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| Bloomberg |
Source for the financial chart.
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| Exelon |
Utility company used as an example for earnings leverage based on gas prices.
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| NRG |
Power generator company used as a comparison example.
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| EPA |
Environmental Protection Agency, mentioned regarding regulatory threats.
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| Philadelphia Stock Exchange |
Mentioned in chart fine print regarding the UTY Index.
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Locations (5)
| Location | Context |
|---|---|
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Primary market focus of the report.
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Mentioned for comparison regarding capex growth.
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Mentioned for comparison regarding capex growth.
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Mentioned regarding capacity markets.
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Mentioned regarding capacity markets.
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Relationships (1)
Document is watermarked 'For exclusive of Jeffrey Epstein' and contains confidential investment strategy from Electron Capital Partners.
Key Quotes (4)
"For exclusive of Jeffrey Epstein"Source
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Quote #1
"Electron’s structural changes: US"Source
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Quote #2
"we believe US utility regulators will continue to pressure returns on equity (ROEs) as interest rates remain low."Source
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Quote #3
"every $1/mmbtu improvement in natural gas prices would increase Exelon’s long-term earnings by more than 20%"Source
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Quote #4
Full Extracted Text
Complete text extracted from the document (2,452 characters)
Global Utility White Paper
CONFIDENTIAL
CONFIDENTIAL
US Utilities PE/SPX PE
[Chart showing line graph from 2002 to 2013]
Close to record relative PE
Source: Bloomberg
[Chart footer text: UTY Index (Philadelphia Stock Exchange Utility Index) vs broad market P/E | Copyright 2013 Bloomberg Finance L.P. | 27-Feb-2013 09:07:49]
[Chart showing line graph from 2002 to 2013]
Close to record relative PE
Source: Bloomberg
[Chart footer text: UTY Index (Philadelphia Stock Exchange Utility Index) vs broad market P/E | Copyright 2013 Bloomberg Finance L.P. | 27-Feb-2013 09:07:49]
While we will continue to see solid growth from the regulated names, and a total return argument can still be made that justifies the current premium valuation of US utilities, we do see capex growth starting to level off. This is the opposite of what will happen in Europe and Asia, where we expect regulatory capex to increase. Moreover, we believe US utility regulators will continue to pressure returns on equity (ROEs) as interest rates remain low. We believe there is greater opportunity among companies with non-regulated power generation assets, as we expect firm natural gas and thus power prices to flow through to earnings. Note, for example, that every $1/mmbtu improvement in natural gas prices would increase Exelon’s long-term earnings by more than 20%, whereas for pure generators such as NRG the leverage exceeds 30%.
Below is a partial list of structural changes driving long/short opportunities in the US:
Electron’s structural changes: US
• Coal retirements’ impact on power markets
• Change in competitive generation market structure as a result of the shale gas boom
• Transmission spending to integrate renewables/improve reliability, and its impact on power prices
• Obama initiatives on climate change legislation, and the EPA threat
• Energy efficiency initiatives – utility uncoupling, demand growth
• Nuclear assets facing closure – impact on power markets
• Renewables’ power markets distortions (impact on peak and off-peak power prices)
• Increased infrastructure spending to move shale gas from basins
• LNG export impact on gas and power markets
• Regulatory ROE changes with low rates, higher capex, declining load growth, commodity price changes
• Increased generator retail selling versus wholesale
• Capacity market in TX, CA
• State generation subsidy impacts on capacity markets
• M&A and asset divestitures’ impact on power markets and utility risk profiles
• Oil-to-gas residential switching
• Electric vehicle demand impact
• Regional load growth changes – manufacturing renaissance, state taxes, etc.
• Change in competitive generation market structure as a result of the shale gas boom
• Transmission spending to integrate renewables/improve reliability, and its impact on power prices
• Obama initiatives on climate change legislation, and the EPA threat
• Energy efficiency initiatives – utility uncoupling, demand growth
• Nuclear assets facing closure – impact on power markets
• Renewables’ power markets distortions (impact on peak and off-peak power prices)
• Increased infrastructure spending to move shale gas from basins
• LNG export impact on gas and power markets
• Regulatory ROE changes with low rates, higher capex, declining load growth, commodity price changes
• Increased generator retail selling versus wholesale
• Capacity market in TX, CA
• State generation subsidy impacts on capacity markets
• M&A and asset divestitures’ impact on power markets and utility risk profiles
• Oil-to-gas residential switching
• Electric vehicle demand impact
• Regional load growth changes – manufacturing renaissance, state taxes, etc.
8
Electron Capital Partners, LLC
Electron Capital Partners, LLC
For exclusive of Jeffrey Epstein
HOUSE_OVERSIGHT_024209
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