This Week in Utilities: Closed Coal, New Nuclear, and a 36 MW Wind Farm Battery
Sep 22nd 2013 10:30AM
Updated Sep 22nd 2013 10:32AM
Utilities have been busy this week, making moves to maximize profit potential. With coal closures, new nuclear, and more, here's what you need to know to stay on top of your dividend stocks' latest moves.
American Electric Power announced Tuesday that it is shuttering its final 500 MW coal-fired unit at its Tanners Creek Plant in Indiana. With this latest news, AEP expects a complete exit from the 995 MW facility, putting total retired coal capacity at 7,176 MW by early 2016.
"The decision to retire Tanners Creek 4 was made as part of our ongoing analysis of resource needs and environmental compliance costs as part of our disciplined approach to capital investment," said President and CEO Nicholas Akins in a statement. "Based on relatively flat electricity demand and the fact that our Indiana Michigan Power customers don't need additional generation at this time, we've determined that the cost of refueling Tanners Creek 4 is not the right capital investment."
According to AEP's release, the closure isn't expected to impact the company's 2013 operating earnings guidance range of $3.05 to $3.25, with earnings growth rate between 4% and 6%. AEP will attempt to recover closure costs for the plant through its Indiana Michigan Power subsidiary.
Battling for batteries
With coal closures more common across the country, companies are looking to ramp up alternative energies. Duke Energy received the top utility-scale energy storage innovation award from the 2013 Energy Storage North America Conference for its new wind-farm battery.
At its 153 MW Notrees Wind Power Project in Texas, the utility has also installed a 36 MW advanced lead acid battery to store windy power for a still day. One of wind's major drawbacks is its inconsistency, and battery storage technology could be a game changer for this renewable energy.
NextEra sells equity
Many dividend stocks have been increasing disitributions back to shareholders in light of big balance sheets and decreasing demand, but NextEra Energy is still in growth mode. The utility announced this week that it is selling $500 million of equity units, giving private investors a chance to cash in on NextEra shares by September 2016 at a price between $82.70 and $99.24. Currently, company shares trade at $80.69.
The company didn't list any specific purpose for the new funds but noted that the $484 million in net proceeds would be added to the "general funds" of its holding company. Citigroup, Morgan Stanley, and Credit Suisse have all snagged a piece of NextEra's offering.
Southern's Georgia Power updated investors this week on construction progress for its new nuclear project. The Vogtle units 3 and 4 facility was the first nuclear project to be approved by the Nuclear Regulatory Commission in more than 30 years, and the project remains on track.
When the units come online in 2017 and 2018, they'll add 2,200 more MW to the 2,400 MW facility. At $4.8 billion, the project costs a pretty penny. And although nuclear is a stalwart of cheap baseload energy, the ultimate profitability of this upgrade will depend on power prices dictated largely by natural gas and consumer demand.
Stay current on electricity
From coal closures to new nuclear, the world of utilities is changing fast, and dividend stocks aren't the stable stalwarts they once were. Be sure to check back weekly for the latest on your portfolio's moves, and you'll be well on your way to electrifying earnings.
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The article This Week in Utilities: Closed Coal, New Nuclear, and a 36 MW Wind Farm Battery originally appeared on Fool.com.Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo. The Motley Fool recommends Southern and owns shares of Citigroup. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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