The stock prices of most electric utilities reflect this to be one of their best years ever. Dividends are rich with 5.5% a common yield. The graph below shows that following May, utility share prices have been on a steady climb. How odd that coal and oil prices are high, power prices are down, and a large swath of the country barely used its air conditioners this summer. As an equity analyst, I have to wonder, what gives?

Few would argue that electric utility companies are not a volume business. Despite the last few years of deregulation, which seemed much like the story of the monkey's paw (the industry's wishes were granted with the worst-possible results), electric companies operate with a regulated return. The more the meter spins, the faster earnings grow. Of course, stock prices anticipate the growth and reliability of earnings. All of the companies in the Dow Jones Utility Index are summer peaking utilities; therefore, the analyst looks for the intensity of June-August to gauge just how fast those home and business meters are spinning.

Granted, the desert states have been hot. Arizona, in particular is blistering. The Southeast has been a little warmer than normal but the chilly heart of the country between the Rockies and Appalachia's should spell calamity for third-quarter earnings.

The map below details cooling degree days by state for 2004 through September 4.

Last year, power generators got a reprieve in late August and September 2003 from an otherwise cool summer. This year, each new week passed with power generators losing more ground. The cool blue color of the Midwest is put into perspective by looking at the last 125 years. A basket of Midwestern states including (Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio and Wisconsin) show the following rankings.

Prices for peak power understandably have fallen as well. In the early part of the summer the nominal price for power compared favorably with last year until one considered the increased cost of coal and transportation. These last few weeks, peak power sold at key interchanges has fallen even further as has the volume of trading. The average price for next-day power fell 24% in AEP and Cinergy. The markets around the Gulf (ERCOT and Entergy) dropped by more than 10%.

Despite the southerly direction of all indicators and the inverse relationship they seem to have with stock prices, a greater mystery remains. How can three major hurricanes hit the service territory of Florida Power & Light, and the stock remain within 1% of its annual high? Again, as a stock analyst with a weather focus, this has been a most unnatural summer in several ways.