PEG's Texas Plant Sale Canceled - Analyst Blog
June 06 2011 - 5:15AM
Zacks
PSEG Power LLC, a unit of Public Service Enterprise
Group Inc. (PEG) has terminated its agreement to sell a
natural-gas fueled power plant in Texas as the buyer failed to
arrange the required finance for the purchase. High Plains
Diversified Energy Corporation (HPDEC) had agreed to buy the 1,000
MW plant for about $335 million.
PSEG Power’s Odessa plant is one of the two 1,000 MW gas-fired
power plants it
has in Texas. The company had agreed to sell the Odessa
plant earlier this year and the deal was expected to close in the
first quarter. The sale of the other facility, Guadalupe, was
completed in the first quarter of 2011.
PSEG Power said it continues to seek offers from other bidders
for the sale of Odessa with the goal of
disposing the plant later this year.
Lubbock, Texas-based High Plains had planned to buy the Odessa
plant through finances obtained from selling
municipal bonds. The utility, created in 2008 by the West Texas
Municipal Power Agency, was unable to get the municipal designation
needed to tap such financing.
High Plains has also agreed to buy Constellation Energy
Group Inc.’s (CEG) Quail Run power plant in Texas for
$185.3 million.
Public Service Enterprise Group, based in Newark, New Jersey, is
a diversified utility holding company. Its operations are mostly
located in the Northeastern and Mid-Atlantic parts of the U.S.
Public Service reaffirmed its fiscal 2011 earnings per share
guidance range of $2.50–$2.75. The Zacks Consensus Estimate for
fiscal 2011 is $2.64, which is well within the company’s
guidance.
Going forward, Public Service Enterprise’s robust portfolio of
regulated and non-regulated utility assets, offers steady earnings
and significant long-term growth prospects. The company remains
focused on operational excellence, financial strength and
disciplined investment. Also, the company’s earnings growth will be
driven by a low-cost nuclear fleet, assumed rate relief and
addition in generating capacities.
However, the increasing cost of coal, higher pension and
financial costs, and power-price volatility are areas of concern.
In the near term, we see shares of the company performing in line
with the broader market and thus reiterate a short-term Zacks
#3 Rank (Hold rating) on the stock, along with a longer-term
Neutral recommendation.
CONSTELLATN EGY (CEG): Free Stock Analysis Report
PUBLIC SV ENTRP (PEG): Free Stock Analysis Report
Zacks Investment Research
Public Service Enterprise (NYSE:PEG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Public Service Enterprise (NYSE:PEG)
Historical Stock Chart
From Jul 2023 to Jul 2024