) business arm Entergy Texas Inc., together with
ITC Holdings Corporation
) and its subsidiary ITC Midsouth LLC, filed an application to
the Public Service Commission of Texas for the spinoff of its
Texas electric transmission unit.
Entergy is pursuing regulatory approval to merge its electric
midstream business and the related substations which will
eventually become a business wing of ITC Holdings. The unit
comprises of roughly 15,400 circuit miles of connecting
transmission lines with 69 Kilovolt (kV) and above voltages.
This was the final leg of the series of local and federal
fillings that were made by Entergy and ITC for the deal announced
in Dec 2011. Entergy in order to keep up with the growing
challenges of the electric industry decided to shed off the
non-core midstream asset. The proceeds of the transaction will
enable the company to meet its modernization and pro-environment
Previously, Entergy received approval from the Mississippi
Public Service Commission ("MPSC") for hiking the monthly
electric rates of residential customers which came into effect
from Feb 2013. This was intended for recovering investments made
by the company to purchase the Jackson power plant from KGen
Hinds LLC. The Jackson power plant will enable Entergy
Corporation to generate power using lesser amount of natural gas
than its older plants.
We believe the combination of positive rate changes and asset
divestiture will bode well for the company's growth objectives as
well as allow the company to seek high-return investment options
in the future. In addition, the divesture will allow Entergy to
focus more on its generation and distribution businesses.
However, the soft performance of Entergy's competitive
business in the Northeast, the fate of its Indian Point plant and
volatile commodity prices are negatives that could thwart
development opportunities. Currently, Entergy Corp. carries a
Zacks Rank #3 (Hold).
Other utility stocks we presently prefer are Zacks Ranked #1
Otter Tail Corporation
) and Zacks Ranked #2
CMS Energy Inc.
Based in New Orleans, Louisiana, Entergy Corporation, together
with its subsidiaries, engages in the electric power production
and retail electric distribution operations in the United States.
The company operates in two segments, Utility and Entergy
CMS ENERGY (CMS): Free Stock Analysis Report
ENTERGY CORP (ETR): Free Stock Analysis
ITC HOLDINGS CP (ITC): Free Stock Analysis
OTTER TAIL CORP (OTTR): Free Stock Analysis
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