PSEG Closes Texas Asset Sale - Analyst Blog
July 20 2011 - 3:23PM
Zacks
PSEG Power LLC, a unit of Public Service Enterprise
Group Inc. (PEG) announced that it has closed the sale of
its 1,000 MW Odessa gas fired generating plant to Odessa Power,
LLC, a subsidiary of Energy Capital Partners II, LP for
approximately $335 million.
The closing of the Odessa sale completes the Texas asset sale
announced by PSEG Power in early 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. In March 2011, PSEG Power closed the sale of the
1,000 MW Guadalupe plant located in South Texas to MinnTex Power
Holdings LLC, a unit of Wayzata Investment Partners LLC, for
approximately $352 million.
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 from funds raised by selling municipal bonds. However, 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, New Jersey, is
a diversified utility holding company. Its operations are mostly
located in the Northeastern and Mid-Atlantic parts of the U.S.
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 peers like American
Electric Power Company 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
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