-----Original Message-----
From: 	Courtney Cleman <Courtney.Cleman@morganstanley.com>@ENRON [mailto:IMCEANOTES-Courtney+20Cleman+20+3CCourtney+2ECleman+40morganstanley+2Ecom+3E+40ENRON@ENRON.com] 
Sent:	Wednesday, September 19, 2001 7:04 AM
To:	kkonolig@ms.com
Subject:	Recession Fear Shouldn't Hurt, But It Does/Kit Konolige/MS Electric  Utilities

Morgan Stanley Electric Utilities Research

Kit Konolige  (212) 761-6237
David Reynolds  (212) 761-6078
Carrie Stevens  (212) 761-6183
Chris Bezler  (212) 761-4487

Recession Fear Shouldn't Hurt, But It Does

* Market orphans energy merchants in search for defensive profile
Stocks are rolling over with the energy sector as investors see
unregulated power as economically and/or cyclical like E&P and
Oil Services
* But unregulated power IS defensive
End demand for power is stable, non-cyclical, and not subject to
much consumer discretion. Unlike oil, market is regional with
pricing unlikely to be affected by current events.
* Big cap utilities outperforming - don't fight the tape
Big, liquid names like DUK, D, AEP, SO and TXU are leading
the way. Valuation differences between the likes of DUK and
MIR or DYN are reaching unrealistic levels.
* Other yield plays
Smaller cap names that have participated and could further in a
drive for yield - PGN, XEL, and PEG.
 - 111236.pdf 
 - Courtney.Cleman.vcf