(Refiles to correct EnerNOC share price in the last paragraph)
By Krishna Das
BANGALORE, June 6 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
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
"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