NU Nu Holdings Ltd

NSTAR Electric and Gas, a Northeast Utilities (NU) business wing, is all set to build a 345,000 volt, 26 mile power transmission line spanning from Carver to West Barnstable and ending at Cape Cod in Southeastern Massachusetts.

Essential features of the project include the construction and installation of transmission towers as well as 18 miles of high-voltage electric lines, along with setting the existing lines on their structures. The project is scheduled to complete by the summer of 2013. With the completion of this entire project, the customers will have increased availability of power and a redundancy option if any unexpected issue arises related to existing lines.

The $106 million program is projected to boost reliability of the power grids and ensure smooth utility services to hundreds of residences across the southeastern Massachusetts area. In addition, a back-up electric supply project is expected to provide pro-environment benefits thereby diminishing the state’s dependence on fossil powered plants.

Additional advantage includes improvement in the economic welfare as the program will lead to job creation. We also expect an expansion in the customer base and a concomitant rise in the top-line near term.

We note that the merger between NSTAR and Northeast Utilities was completed in the first half of 2012, creating one of the nation’s largest utilities. The present infrastructure initiative on part of NSTAR will generate substantial revenue upside for the company in the near term. However, unexpected outages and failure of the company’s cost-control initiatives keep us wary.

The Zacks Consensus Estimates for the third quarter and full year 2012 are currently pegged at 66 cents per share and $2.28 per share, respectively. The company’s closest peer is Indiana-based NiSource Inc. (NI). NiSource is also in the process of upgrading its Columbia gas lines infrastructure to improve its service efficiency and reliability.

Northeast Utilities currently has a short-term Zacks #3 Rank Hold rating. Based in Hartford, Connecticut, Northeast Utilities is a public utility holding company which provides energy delivery services to residential, commercial and industrial customers in Connecticut, New Hampshire, as well as Massachusetts. The company engages in the purchase, delivery, and sale of electricity.

 
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