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Date: Tue, 5 Jun 2001 19:58:22 -0700 (PDT)
From: vkaminski@aol.com
To: kamins@enron.com
Subject: An article from CBS.MarketWatch.com
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This story was sent to you by vkaminski@aol.com with these comments:
From CBS.MarketWatch.com, online at:http://aolpf5.marketwatch.com/news/stor=
y.asp?siteID=3Daolpf&guid=3D{2B94A9E8-D298-4858-AB83-E8367AED9C8F}=20

=09 Avoiding the shock in utility stocks  =09
=09 By Myra P. Saefong, CBS.MarketWatch.com  1:00 AM ET May 31, 2001 Newswa=
tch More Headlines  =09
=09 =09
SAN FRANCISCO (CBS.MW) -- Fund manager Greg Phelps has just the right weapo=
n to stave off the short circuit in utility stocks: an investment strategy =
that helps him see the future.  When choosing utility stocks for the $225 m=
illion John Hancock Patriot Select Dividend Trust [DIV ], Phelps takes a lo=
ok at three key issues: dividend yield and sustainability, management and r=
egulatory environment.  His strategy has helped the 11-year old, closed-end=
 fund see a net asset value return of 17.21 percent year-to-date and 4.51 p=
ercent on a 3-year annualized basis, according to Lipper. The Philadelphia =
Utility Index [$UTY ] has risen about 20 percent over the past year.  Phelp=
s' investment preferences have also kept him away from investing in Califor=
nia's cash-starved utilities, Edison International [EIX ] and PG&E Corp. [P=
CG ].  It's been years since the Select Dividend Trust Fund has been expose=
d to any California utility, Phelps said.   "I never felt comfortable with =
the regulatory environment in California," he said, emphasizing his nervous=
ness over the fact that Edison and PG&E agreed to have their rates capped a=
nd could not pass on the higher cost of electricity to their customers.   P=
helps believes Florida provides a good regulatory environment for utilities=
 because its high temperatures and above average population growth means it=
 will have to build out its electric utility infrastructure and transmissio=
n distribution system and create new generating capacity.   Since electrici=
ty is such an integral part of the state's economy, Florida has typically t=
reated its utilities very well, he said, giving them reasonable allowed ret=
urn on equity and the ability to pass through costs.  Using this outlook on=
 the electric industry, Phelps believes Alliant Energy Corp. [LNT ] is a gr=
eat pick. It has an attractive dividend yield. It's also in a favorable reg=
ulatory environment mostly in Wisconsin and Iowa and is a probable consolid=
ation candidate. The stock closed Wednesday at $30.15, off one penny.  Phel=
ps' second pick would be TECO Energy [TE ] because it has a "great track re=
cord" of increasing its dividends -- at least 10-straight years -- and its =
located in Florida. It also has a profitable and growing coal mining and tr=
ansportation operation as a unregulated subsidiary, he added, noting that c=
oal is a big part of President Bush's energy plan. Shares of the company cl=
osed at $31.73, up 15 cents on Wednesday.  Finally, Kansas City Power and L=
ight [KLT ] boasts a higher-than-average dividend yield, much like Alliant =
Energy. It's also located very close to where Warren Buffet's main utility =
operations are so it could potentially be on his "shopping list." The compa=
ny has earnings growth potential with its new generating plants coming on l=
ine for this summer. Phelps also likes the company's move to build out its =
fiber optic subsidiary. On Wednesday, shares closed at $25.09, up 14 cents.=
 Myra P. Saefong is a reporter for CBS.MarketWatch.com in San Francisco.  =
=09   =09
