REFILE-EnerNOC, Comverge shares rally on regulatory commentary
(Refiles to correct EnerNOC share price in the last paragraph)
By Krishna Das
BANGALORE, June 6 (Reuters) - Investors on Monday cheered the stocks of EnerNOC Inc and Comverge Inc , after federal energy regulators on Friday said the proposal to cap payments to demand-response companies may be "unlawful."
The much-anticipated decision could assuage some worries of profit reduction at the energy demand-response companies, which work with grid operators, utilities and large power consumers to lower electricity use in expensive peak hours.
Grid operator PJM wants to cap payments to demand-response companies for customers that are shedding load above a maximum individual threshold -- which is the average of the customers load during the five peak hour of the prior year.
On Friday, the Federal Energy Regulatory Commission (FERC) said the proposed changes to how electricity load reductions by large energy consumers are measured during system emergencies may be "unlawful," and that it needs more time to review the matter. [ID:nN10105404]
Partly due to concerns that possible changes could hurt the companies' sales, EnerNOC and Comverge have seen a big erosion in their market value so far this year.
"We view this news as a positive for EnerNOC as a delayed rule change de-risks 2011 estimates and longer-term the FERC appears largely supportive of demand response," said Wells Fargo Securities analyst Sam Dubinsky.
"With headwinds clearing, we continue to recommend EnerNOC shares for investors with long-term time horizons."
PJM, which runs the power grid and energy market serving 51 million people from New Jersey to Illinois, is EnerNOC's top customer.
"We have always advocated that real, measurable demand response capacity should be recognized for the value it provides to the grid," David Brewster, President of EnerNOC, said in a statement on Monday.
EnerNOC shares were trading up 3 percent at $16.75, while those of Comverge were trading 2 percent higher on Nasdaq. (Reporting by Krishna N Das in Bangalore; Editing by Saumyadeb Chakrabarty)