NEW YORK, NY--(Marketwire - Jan 31, 2013) - As a result of plummeting natural gas prices and new carbon emission limits, many U.S. utilities increased the use of natural gas for electricity in 2012. For the 12 months ended September 30th, data from the Energy Information Administration has shown that natural gas accounted for approximately 30 percent of all electricity generated in the U.S., while coal accounted for 37 percent. Five Star Equities examines the outlook for companies in the Utilities Industry and provides equity research on FirstEnergy Corp. (NYSE: FE) and Pepco Holdings, Inc. (NYSE: POM).
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In comparison, a decade ago electricity generated from coal and natural gas was 50 percent and 18 percent, respectively. Despite cheap natural gas prices utilities have begun to diversify their energy portfolios to help protect themselves from future uncertainties. Natural gas's surge between 2002 and 2008, which saw prices nearly triple, forced power companies to raise electricity prices abruptly.
Southern Co. has begun building a coal-gasification power plant and a nuclear power plant, which are expected to be in use between 40 years and 60 years. American Electric Power's Chief Executive Nick Akins is targeting an electricity generating portfolio consisting of 35% coal, 30% natural gas, and the remaining from "mixed sources and conservation" according to the Wall Street Journal.
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FirstEnergy includes one of the nation's largest investor-owned electric systems and a diverse generating fleet with a total capacity of more than 20,000 megawatts. The company is scheduled to release its fourth quarter results on Monday, February 25th. FirstEnergy offers investors an annual dividend of $2.20 per share for a dividend yield of approximately 5.4 percent.
Pepco Holdings is one of the largest energy delivery companies in the Mid-Atlantic region, serving about 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey. The company's Board of Directors has declared a quarterly dividend of $0.27 per share payable on March 28, 2013. Pepco is scheduled to release fourth quarter results on Monday, February 25th.
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