Electric Grid In California In Emergency Mode -- June 21, 2016

Updates

June 27, 2016: IER has an update and an analysis of California's electricity grip debacle.  

California is again having issues with adequate electricity and its customers are being told that summer blackouts may occur. Its utility scale generation is dependent primarily on natural gas and renewable generated electricity.

California decided years ago that it would not build any coal-fired power plants and gets just 0.2 percent of its generation from a few coal units it still has on-line. (It should be noted, however, that California consumes electricity from coal generated out of state and imported to southern California–up to 50 percent at times.

The state retired two of its nuclear units in 2013 and is expected to retire its last two operating nuclear units over the next decade when their nuclear licenses expire, eliminating 9 percent of its carbon free electricity.

California has mandated that 50 percent of its electricity come from renewable fuels by 2030, currently getting 30 percent of its utility scale electricity from renewable fuels and 59 percent from natural gas.

Which means that those emission-free cars in California are responsible for spewing CO2 in some other state. Fortunately, for Californians, CO2 respects borders even if humanity does not.

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An old story for most readers, but it's starting to get mainstream media attention. California can expect a two-week period in which everyone could be without power on occasion.

MuskMelon could strike while the iron's hot -- sell a lot of household storage batteries.

And engineers need to work to prevent nationwide disruption.

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Watts Up With This? 

Updates

June 22, 2016: SeekingAlpha contributor --

I will say this flat out, there is no legitimate business purpose to this at all. Elon Musk is simply trying to prop up his cousin's failing business, which is down from almost $90 at its peak. Musk swoops in with a $27 bid, a 30% or so premium, and fatigued SolarCity  investors sell. Obviously, due to the nature of Tesla, there's no way that it would have ever involved any cash whatsoever.

June 22, 2016: it took awhile, but Reuters is finally weighing in. 

June 22, 2016: wow, even the Coyote Blog gets involved with this story.

June 22, 2016: why Tesla is no trillion-dollar baby; Tesla's old formula for success won't further successful forever -- WSJ.

Though details on the financial benefits of the proposed tie-up are scant, Tesla CEO Elon Musk was his usual bold self on a conference call with analysts Wednesday. He said that the proposed deal could help Tesla become the world’s first company with a trillion-dollar market capitalization. That would require a more than 30-fold increase from today’s value.

Yet that boast may not be the most jarring one Mr. Musk has offered of late. Powered by the new Model 3 mass-market sedan, Tesla aims to deliver 500,000 vehicles in 2018, Mr. Musk said last month. That target is two years ahead of the previous goal. Tesla forecasts 80,000 to 90,000 deliveries this year.

In a world of slow growth and cautious corporate management teams, bold ambition is a central part of Tesla’s appeal to investors.  But reaching for the stars has proven expensive.

Tesla’s core business has burned more than $3 billion in cash over the past six quarters. Capital needs are expected to further intensify over the coming years. No surprise there; automobile manufacturing is a low-return, capital intensive business.

June 22, 2016: MuskMelon fails to assure investors rattled about SolarCity takeover -- Bloomberg. TSLA has recovered a bit from what futures indicated; now trading just above $200, at $201.

June 22, 2016: MuskMelon "seeks to assure rattled investors with 2nd SolarCity call." -- Bloomberg.

June 22, 2016: Bloomberg weighs in. No matter how "they" spin it, it suggests that MuskMelon is severely cash-strapped. 

Later, 8:31 p.m. Central Time: MuskMelon may not see Tesla as an auto company.

"Fast Money" trader Brian Kelly said that Tesla Motors' bid for SolarCity indicates that "Elon Musk doesn't view Tesla as an auto company."

He explained that while Tesla is selling electric vehicles at the moment, there have been signs that its CEO, Musk, has been intending to do more.

"If you look at what he's doing with the Gigafactory, you look at this acquisition, he's clearly going after the decarbonization of the electric grid in the U.S. To me, that's the bigger play in all of this," Kelly said.

Trader Karen Finerman said that Tesla's offer, valued up to $28.50 per share, "doesn't seem like a gigantic price for a company that was trading significantly higher not that long ago."

Trader Tim Seymour said that the timing of the deal seems "distracting," citing Tesla's struggles to meet sky-high expectations for deliveries and its mass-market car.

"They just had a capital raise. They probably need more capital. I mean, why now? ... This deal makes no sense," he said, adding that he's always found Tesla's valuation tough to justify.

Wall Street will surely be watching the aftermath of Tuesday's announcement closely. Famed short seller Jim Chanos has been outspoken about his short positions in both companies.

In September, Chanos told CNBC's "Squawk Box" that SolarCity is the most problematic of companies led by Musk because it's "burning $300 million to $500 million a quarter putting up solar panels that may not be worth anything in 20 years."

Later, 8:20 p.m. Central Time: MuskMelon just kicked his shareholders in the teeth. LOL. 

Elon Musk, the CEO of Tesla Motors, just hung an albatross around his shareholders' necks.

Through Tesla, Musk has made an all-stock deal offer for embattled solar-energy firm SolarCity, which Musk cofounded.

He said that this deal would help to make Tesla the first "vertically integrated energy company offering end-to-end clean-energy products to our customers." SolarCity's stock is up 20% on the news.

Of course, this is just an offer and not yet a done deal, and there are plenty of reasons why it could still fall through. But if it does happen, then Tesla shareholders should be worried.

Now, in case you haven't been following the SolarCity story, it's the company that, a few minutes before this deal was announced, Goldman Sachs said was the "worst positioned" for growth in its sector.

It's a company that, aside from this M&A bump, has seen its stock collapse almost 60% since the start of the year and lowered guidance for the year down 16% during its last earnings call.

It's also a company that is helmed by Elon Musk's cousin, Lyndon Rive. Go figure.

I think this stack of cards is starting to fall. 

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From CNBC:

Tesla Motors said on Tuesday it would bid $2.8 billion to buy SolarCity, sending the solar energy company's shares soaring. 

SolarCity shares popped more than 15 percent after-hours on the offer of $26.50 per share to $28.50 per share, while Tesla shares dropped as much as 10 percent, trading below $200 per share for the first time since March.

SolarCity's controlling shareholder, Elon Musk, is also the CEO of electric car company Tesla. The two sets of shareholders will vote on the merger independent of Musk after a due diligence process, the Tesla CEO said.

While Tesla has considered the deal "blindingly obvious" for a while, the timing seemed right as the companies released products that were increasingly aligned, Musk said in a conference call.

It looks pretty obvious what's going on. If I were a Tesla investor I would be furious. LOL.

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This Is Really Cool: Chick-fil-A -- America's Top Fast Food Chain -- Again

From NBC News:

Once again, Chick-fil-A is the top-rated fast food chain with a score of 87, up one percent from last year. Papa John's comes in a distant second at 82, even though it gained five percent. Little Caesars had the biggest improvement in the entire fast food category, up 9 percent to 81, landing just below Papa John's.

Panera Bread also scored an 81 and Arby's jumped eight percent to 80, following a major overhaul of its menu and remodeling of its stores. 

Chipotle Mexican Grill took the biggest hit, dropping six percent to 78. This followed widespread reports of food-borne illnesses at some of its stores. 

Other chains: Dunkin' Donuts and Subway (80), Domino's and KFC (78), Pizza Hut (77), Starbucks and Taco Bell (75).

Hamburger chains typically score below the industry average, but this year they all showed some improvement. Burger King and Wendy's tied at 76, and Jack in the Box scored a 74. Once again, McDonald's came in last at 69, but it was up three percent from last year. This was primarily due to the popularity of its new all-day breakfast menu.

I would assume Starbucks scores so low because of lousy/limited food choices and expensive to boot.

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Baghdad? Mosul? Damascus? Tripoli? Nope, Chicago

From The Chicago Tribune:

The city recorded its 300th homicide this weekend and went on to record six others over a 60-hour period that saw 59 people shot, 13 fatally, from Friday afternoon through early Monday morning.

So far this year, about 1,800 people have been shot across the city and more than 200 of those wounded have died of their wounds. A total of 306 people have been killed this year by shooting, stabbing or other means.