We Tell It Like It Is
Answering questions about our business.
What keeps our competitive energy profits from falling to razor-thin margins?
We do much more than simply provide natural gas and electricity. We optimize the sourcing and delivery of energy-sourcing it from the best providers, delivering it across the best routes and managing it so it can be delivered to customers on an as-needed basis.
Because of our size, expertise and market reach, we're able to bring together energy from many sources and choose the best delivery options...while also helping our customers manage their energy use. We have the ability and flexibility to put together the most cost-effective way to meet our customers' energy needs.
Doing those functions at a low cost per unit or per process enables us to earn higher margins.
Do high coal or natural gas prices hurt or help us?
Increasing or decreasing prices for coal, natural gas or other fuels, and the resulting fluctuation in electricity prices, have a minimal effect on our earnings. We manage toward commodity price neutrality.
When we make a deal to buy or sell fuel or natural gas or electricity, we hedge to offset risk. That means if what we've agreed to buy or sell goes up in value, our hedge value goes down. Likewise, if what we've agreed to buy or sell goes down in value, our hedge value goes up.
As a result, we have protected ourselves from fundamental shifts in commodity prices.
As an investment, how do we differ from a traditional, regulated utility?
I believe that we offer a tremendous value proposition. We're exceeding our 10 percent average annual earnings growth goal and paying a dividend that we expect to continue increasing in line with our earnings growth. At the same time, our stock price has had a price-earnings ratio significantly below those of what we believe are comparable companies and industries.
Investing in a traditional, regulated utility generally is a standard income proposition. On average, they grow about 3 percent per year and pay dividends with yields usually in the 5 percent range.
We see ourselves differently. We see ourselves growing 10 percent in a 3 percent industry.
