Any power utility executive will tell you that the industry has been burned by unexpected natural gas price spikes a number of times over the past 10 years. In some cases, regulators refused to allow the utility to pass on the fuel cost to ratepayers, and investors took the hit in the form of lower earnings. Follow up: While this does not happen often, when there is widespread consumer outcry over high electric bills as a result of natural gas price spikes, known in the industry as the “French Revolution effect,” the relationship with regulators can become so contentious as to materially undermine the utility’s earnings profile over a period of years. That’s why recent moves by various utilities to develop shale gas pipelines, buy production assets, or even lock in long-term, low-priced natural gas with producers should put those firms in a more favorable light among investors. These […]