WCTA Breakfast: The Role of Coal in the Future of Energy featuring Julien Dumoulin-Smith

Julien Dumoulin-Smith Julien Dumoulin-Smith addressed a WCTA audience on March 21, 2013.

Julien Dumoulin-Smith is a Director in UBS Investment Research’s Utilities group, primarily focusing on the Diversified Utilities and Independent Power Producers (IPP). Covering the Electric Utilities since 2007, Julien has followed a broad spectrum of the space including both regulated and competitive integrated utilities, as well as IPPs. He was ranked the “Rising Star” for the last three years running (2010-2012) by Institutional Investor magazine, as well as #1 Stock Picker for IPPs in the FT’s Starmine rankings, and #3 Stock Picker for the entire Utility Sector in the Wall Street Journal’s Best on the Street rankings for 2011. Additionally, he was ranked #1 in Institutional Investor’s survey of Hedge Fund managers for 2012. Julien earned his BS at Columbia in Applied Math. He is also a CFA charterholder. 

Julien Dumoulin-Smith’s comments:

  • The economics of coal exports don’t make sense–and that is even before you consider the approval process.
  • Natural gas may drive down utility prices, but decommissioning nukes and coal will result in overall higher prices for electricity.
  • Energy is incredibly effective at change when everyone comes together.  We are at another pivot point that will force change over the course of the next decade:  Decommissioning of nuclear and coal plants combined with cheap natural gas.It costs $1 billion to close a nuclear plant.
  • The trend today is that gas is THE energy source.
  • The nuclear industry is in distress; cheap natural gas is making it worse.
  • Western coal is a lot more expensive to ship than it is to buy.
  • Coal isn’t going away, but prices have to rise to keep the industry viable.
  • Retiring coal plants in a distressed industry is going to be a big problem in the latter part of decade.
  • There are staggering improvements in energy efficiency in the Northeast.
  • Key question:  Is natural gas an interim source of energy or the new standard?
  • There will be lots of new gas plants announced his year.
  • Sector consolidation in the coal sector will accelerate–there is massive distress in the coal industry.
  • The new air quality regulations may be the most aggressive ever.
  • Carbon regulation is not likely to be in place until 2020-23.
  • Western coal (from Wyoming and Montana) is lower in sulphur and has a positive margin.