NextEra Energy Inc.
) business arm Florida Power & Light Company ("FPL") issued a
request for proposal ("RFP") for the construction of a natural
gas pipeline to supply more power to its Florida customers.
The proposed pipeline project is anticipated to deliver
400,000 million British thermal units per day (MMBtu/d) of
natural gas, which roughly translates into 400 million cubic feet
per day (MMcf/d), to FPL at the start of 2017. The capacity
supplied could further increase in the future.
This is the third key pipeline initiative undertaken by
NextEra Energy with two other natural gas pipelines already
operational and running at full capacity in the Florida
peninsula. The Southeast Pipeline will be built to meet the
growing demand for electricity for which the state requires new
natural gas transportation facilities by 2017.
These projects will lower NextEra Energy's dependence on crude
oil source especially from the offshore Gulf of Mexico. This
would cushion its business to a certain extent from the impacts
of tropical weather variations that leads to interruptions in
Furthermore, the pipeline will expand the state's
accessibility to onshore prospects. It will not only ensure
reliability but also deliver higher gas volumes.
Next to Texas, Florida leads the table in terms of consumption
of electricity generated from natural gas. Natural gas occupies
60% share in the total power provided to the customers. With the
existing shortage of transporting and storage facilities in
Florida, this pipeline will be a significant infrastructural gain
for the company.
NextEra Energy is furthering its natural gas business goals
and plans to upgrade three of its previous oil and gas-fired
facility into a high-efficiency gas-based complex which will be
nearly 33% more productive and 90% cleaner.
Given the current popularity of natural gas as a source for
utility-scale generation in the U.S, we believe this pipeline
project will complement the company's future growth.
However, volatility in power prices and pending rate case
outcome for FPL's new rates could hurt NextEra's near-term
opportunities. The company presently retains a short-term Zacks
#3 Rank (Hold rating).
Another Zacks #3 Ranked utility provider,
) is also stepping up its natural gas business. Recently,
FirstEnergy plans to build a high-tech and eco-friendly
transmission control facility in its Akron operational base in
For NextEra Energy, the Zacks Consensus Estimate for the
fourth quarter and full year 2012 currently stand at 96 cents per
share and $4.50 per share, respectively. For 2012, NextEra Energy
reiterated its earnings expectation in the range of $4.35−$4.65
With a market capitalization of $29.87 billion, the Juno Beach
based electric generation, transmission and distribution company
has 14,500 total employees.
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