Don Bauder

Don Bauder is a Reader contributor. See staff page for published articles.

Sempra Energy CEO and boardmembers sued over Aliso methane leak

MORE EVIDENCE THAT WALL STREET DOESN'T THINK ALISO CANYON LEAK WILL HURT SEMPRA STOCK. Here is an eye-opening statement by Mark Barnett, an analyst for Morningstar. In a report dated April 29, Barnett wrote, "The California Aliso Canyon leak, WHILE NOT IN OUR VIEW A SUBSTANTIAL WEIGHT ON VALUATION (emphasis mine,) will provide some political headaches as Sempra negotiates with regulatory agencies." "Not a substantial weight on valuation" is Wall Street argot meaning that despite the liabilities that will surely come from Aliso, Sempra stock will sail right along with the help of the California Public Utilities Commission (CPUC). Sempra is not only negotiating with a lot of regulatory agencies, it is being sued in more than 80 civil suits that will likely be consolidated. But Wall Street knows that in California, utility profits come first and customers come last in the eyes of the CPUC. Barnett appears to hedge a bit on his view on California regulation, but really doesn't. (Hedging is one of the things Wall Street does best.) In one place, Barnett says "We no longer consider California a premium regulatory environment, though it remains in flux." In another place, he writes, "The California Public Utilities Commission is a relatively constructive partner compared with many of Sempra's peers." Those statements really aren't contradictory. He says California is no longer a PREMIUM regulatory environment, but it is better than that which most other utilities deal with in their states. Best, Don Bauder
— May 2, 2016 3:36 p.m.

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