CAPS Rating: 2 out of 5

Holding company for Pacific Gas and Electric Company which is primarily engaged in the businesses of electricity and natural gas distribution, electricity generation, procurement and transmission, and natural gas procurement, transportation and storage.


Player Avatar xthecritic (50.41) Submitted: 3/3/2008 9:31:03 AM : Underperform Start Price: $34.62 PCG Score: -49.89

Sector Play - The utility sector is out of favor as a result of rising Inflation. Regulated prices make it hard on utilities to pass through rising costs to customers.

-- Prophet of Portsmouth

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Member Avatar xDrexelCo (24.42) Submitted: 4/23/2008 1:27:06 PM
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I don't think inflation has a great effect on utility prices. Utility companies take advantage of inflation by raising their rates. When inflation slows, the rate raises are rarely, if ever, reduced. And, utility companies have terrific cash flow. If the consumer does not pay their bill, the utility quickly shuts off their power. I have PCG (Pacific Gas & Electric) here in central California. If my bill isn't paid in two weeks from the due date, they stick me with a late charge. Which reminds me ......... Ouch!

Member Avatar xthecritic (50.41) Submitted: 4/23/2008 2:07:25 PM
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Price changes are subject to regulatory approval.... politicians like being re-elected. As a result, it is not as easy as you might think to pass through rate increases. In addition, these companies trade based on dividend yield and as inflation increases - the real dividend yield decreases.

Member Avatar ECallahan100 (68.42) Submitted: 5/31/2008 8:42:07 PM
Recs: 0

The regulatory rules do play an important part of the company's profit margin but I agree whith the comment that prices rarely if ever go down so if a more cost effective energy source could be put onto the grid by the company then that should boost profits.That doesn't include any governmental incentives that may play a part in the future for greener energy policies.

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