JUNE 11, 2010

By Josh Silverman, Director, Term Funding & Risk Management

In prepared testimony to the House Budget Committee on June 9, Federal Reserve Chairman Ben Bernanke said the European sovereign debt crisis likely will have only a “modest” impact on recovery efforts in the United States if financial markets continue to stabilize.

“Although the recent fall in equity prices and weaker economic prospects in Europe will leave some imprint on the U.S. economy, offsetting factors include declines in interest rates on Treasury bonds and home mortgages as well as lower prices for oil and some other globally traded commodities,” he said. Read More »

JUNE 11, 2010

Census Hiring Paces Employment Gains

Bureau of Labor Statistics

View large chart

U.S. employers added jobs in May at the fastest pace in a decade, although gains were mostly a result of temporary government hiring for the 2010 census. Of the 431,000 net jobs created in May, 411,000 were linked to census hiring. The private sector, a better gauge of the labor market, only added 41,000 jobs—a disappointing performance following strong gains in March and April. The pickup in hiring, in addition to more workers dropping out of the labor force, brought the unemployment rate down to 9.7 percent from 9.9 percent. A 0.3-percent increase in aggregate hourly earnings and a 0.1-hour increase in the average work week were positive notes in May’s employment report.

Wall Street was disappointed by the payroll figures, as the consensus forecast was for an additional 536,000 jobs and greater job creation in the private sector. Following nearly two years of continual job losses, the U.S. economy has added 982,000 jobs this year and is expected to continue to add jobs throughout 2010. Read More »

JUNE 11, 2010

World energy consumption will increase 49 percent between 2007 and 2035, according to the U.S. Energy Information Administration’s “International Energy Outlook 2010.” The report, released May 25, noted rapidly developing countries such as China and India are primary drivers of growth. The two countries accounted for about 20 percent of total world energy consumption in 2007; their combined energy use could more than double by 2035.

Renewable energy sources, particularly hydroelectric and wind power, are projected to be the fastest-growing suppliers of world energy through 2035, the report said, although coal, oil and other fossil fuels will still meet more than three-fourths of total global energy needs if current policies remain in place. The full report can be found on EIA’s wesite.

JUNE 11, 2010

J. Andrew Don

J. Andrew Don, CFC’s vice president of Capital Market Relations, has been appointed senior vice president and treasurer for the organization. Don’s new role entails oversight of the Treasury Group, which includes all funding operations for CFC, as well as investor relations, banking relations, rating agency liaison and the loan syndication function on behalf of CFC’s member borrowers.

“Andrew has been a vital part of our funding arm for more than 10 years,” said CFC Governor and CEO Sheldon C. Petersen in announcing the appointment on June 1. “I welcome his expertise and his insight to the CFC executive team.”

Don joined CFC in 1999 as the director of Loan Syndications. He has an extensive background in banking and treasury operations. Prior to joining CFC, Don worked for The Bank of Tokyo–Mitsubishi, the Bank of Montreal and The Bank of New York. He received his B.A. from Dickinson College and his M.B.A. from Fordham University.

JUNE 11, 2010

CFC Corporate Counsel James Jablonski addressed the Distribution Cooperative Attorneys’ Seminar in Little Rock, Ark., on May 27, discussing ethics issues related to internal investigations of employee or corporate misconduct.

The annual legal seminar, sponsored by the Arkansas statewide association, covered a range of regulatory, legislative and ratemaking issues. Jablonski outlined several potential triggers that could prompt an internal investigation of misconduct, including allegations by whistleblowers, self discovery, government inquiries, auditor allegations and media reports. Read More »

JUNE 11, 2010

Electric utilities should have no trouble meeting demand this summer, according to a new report from the North American Electric Reliability Corp. (NERC). Although summer heat could linger into a warmer-than-usual September, reliability is expected to hold steady due to the continued leveraging of demand-response programs, the addition of wind generation and—most notably—reductions in demand.

Summer peak demand is forecast to drop 2.2 percent from last year and 3.9 percent compared to 2008. Projected summer peak demand decreased 10 gw per year for both 2009 and 2010. Read More »

JUNE 11, 2010

More than 100,000 residents of the Old Dominion were welcomed as new members of two electric cooperatives last week, following a joint acquisition of the Virginia distribution assets of Greensburg, Pa.-based Allegheny Energy, a multi-state investor-owned utility (IOU).

Rappahannock Electric Cooperative (REC), Fredericksburg, Va., joined Shenandoah Valley Electric Cooperative (SVEC), Mt. Crawford, Va., in purchasing Potomac Edison Co., a subsidiary of Allegheny Energy, on June 1. The move is the largest acquisition of an IOU made by electric cooperatives.

“The switchover from Potomac Edison service to cooperative service on Tuesday was smooth and uneventful,” said Myron Rummel, SVEC president and CEO. “Our new member/owners in the acquired territory woke up to alarm clocks, lights and coffee makers powered by the same safe, reliable electricity they used to power their lamps, computers and televisions the night before.” Read More »

JUNE 11, 2010

Electric cooperatives can build a strong future by leveraging time-tested values, CFC Governor and CEO Sheldon C. Petersen stressed in opening CFC Forum 2010. More than 900 electric cooperative managers, directors and staff gathered in Philadelphia for the event, held June 7-9.

Sheldon C. Petersen

With the theme “Proven Values, New Beginnings” the Forum focused on leadership, the economy and finding success in an uncertain energy environment, as Petersen outlined in his opening remarks.

“Our focus on the electric utility industry includes financial leadership. Electric cooperatives have provided strong financial leadership for decades,” Petersen said. “Since the co-ops’ very inception, co-ops have been recognized as well-managed and financially sound institutions.

Petersen pointed to preliminary results of CFC’s 2009 Key Ratio Trend Analysis (KRTA) as an indicator of electric cooperatives’ strength, noting that cooperative leaders are making the right decisions—though sometimes tough ones—in hard economic times (see “Preliminary 2009 KRTA Results Reflect Co-ops’ Financial Strength,” Solutions News Bulletin, April 23, 2010).

CFC’s third-quarter financial results also were highlighted as a strength. Petersen stressed the importance of cooperative independence in uncertain times and the freedom to face hard choices with non-governmental solutions at hand. CFC’s founding in 1969 was born of that very logic. Read More »