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Electric Utilities

Utilizing Regulatory Mechanisms to Insulate Earnings from a Negative Covid-19 Impact

Published May 26, 2020



  • In the current market environment where Covid-19 related costs are likely to be material, we look favorably on utilities that have the most advantageous regulatory mechanisms to allow them to recover costs and lost revenue expeditiously.

  • We expect companies with new ‘full decoupling mechanisms’ to have more resilient revenue in 2020 and 2021.

  • We see ES and EXC with a combination of favorable regulatory mechanisms and tepid earnings expectations relative to the 2008-2009 recession – we expect them to outperform market expectations. We forecast higher risks for AEP and XEL given less favorable regulatory mechanisms combined with rosy market expectations for revenue.


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