One way to analyze electric utility stocks is to look at what types of fuel they use to run their generators and how much exposure to oil and natural gas they have.

If you believe the price of oil and gas has peaked and will continue to drop, then it may be time to take a close look at the electric utility stocks with the highest usage of these fuels.

Pinnacle West Capital (PNW) has one of the heaviest exposures, with 24% of its electric energy coming from oil and natural gas. About 35% comes from coal and 21.5% from nuclear. This Phoenix-based company has a P/E of 10, a PEG of 3.55 and a yield of 6%.

Westar Energy (WR) generates about 34% of its energy from natural gas, with 56% from coal and 9% from nuclear. This utility, which serves Kansas, has a P/E of 13, a PEG of 3.28 and a yield of 5%.

Entergy (ETR) has about 18% of its fuel sources coming from oil and natural gas, 12% from coal and 33% from nuclear, with the rest purchased. Entergy serves Arkansas, Mississippi, Texas and Louisiana, including the New Orleans, where it is based. The stock has a P/E of 16, a PEG of 1.19 and a yield of 3%.

OGE Energy (OGE) has 29% of its energy coming from natural gas, with 51% from coal. It serves the South Central U.S. The stock has a P/E of 13, a PEG of 3.15 and a yield of 4.2%.

Alliant Energy (LNT) has 28% of its electricity generated from natural gas and 6% from oil. The company serves Iowa and Southern Minnesota. The stock has a P/E of 9, a PEG of 2.45 and a yield of 4.1%.

Cleco (CNL), another Louisiana-based company, has 14% exposure to natural gas. The stock has a P/E of 12, a PEG of 1.09 and a yield of 3.5%.

If you like utility stocks, you should take a look at Highest-Yielding Electric Utilities and Highest-Yielding Natural Gas Utilities. You can also find an Excel database of utility stocks, which you can download, add to and sort, at WallStreetNewsNetwork.com

In the slow days of August, this could be another area of the market that could be overlooked.

Posted on Aug. 18, 2008