PEG to Sell Texas Power Plant - Analyst Blog
June 27 2011 - 11:56AM
Zacks
PSEG Power LLC, a unit of Public Service Enterprise
Group Inc. (PEG) announced that it has agreed to the sale
of its 1,000 MW gas-fired Odessa generating facility in West Texas.
The facility would be sold to Odessa Power, LLC, a subsidiary of
Energy Capital Partners II, LP for $335 million.
Public Service Enterprise expects to close the sale during the
third quarter of 2011. PSEG Power’s Odessa plant is one of the two
1,000 MW gas-fired power plants it has in Texas. The sale of the
other facility, Guadalupe, was completed in the first quarter of
2011.
Earlier the Odessa Plant was slated to be taken over by High
Plains Diversified Energy Corporation (“HPDEC”) for about $335
million. However, the deal was shelved in early June 2011, as the
buyer failed to arrange the required finance for the purchase.
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.
Public Service Enterprise Group, based in Newark, NJ, 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 to 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. This is in line with its peers like
American Electric Power Co. Inc. (AEP) and
Ameren Corporation (AEE)
AMEREN CORP (AEE): Free Stock Analysis Report
AMER ELEC PWR (AEP): Free Stock Analysis Report
PUBLIC SV ENTRP (PEG): Free Stock Analysis Report
Zacks Investment Research
Public Service Enterprise (NYSE:PEG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Public Service Enterprise (NYSE:PEG)
Historical Stock Chart
From Sep 2023 to Sep 2024