Entergy Corporation 's ETR wholesale generation division, Entergy Wholesale Commodities, has agreed to sell its 583-megawatt ("MW") Rhode Island State Energy Center ("RISEC"), in Johnston, RI, to Carlyle Power Partners for approximately $490 million.
Assuming the sale closes by the fourth quarter of 2015, the company expects a net gain of approximately 50 cents per share in the quarter. The gain on sale will be categorized as a special item and hence will be excluded from operational earnings.
RISEC power plant is a natural gas-fired, combined-cycle generating facility which was purchased by Entergy for $346 million in 2011. It started operating in 2002.
RISEC is one of the most efficient combined-cycle facilities in New England that is well-positioned to benefit from the strong regional market dynamics. The region witnesses a steady flow of investments because of its transparency and incentives for reliable generation.
We note that Entergy posted weak second-quarter results due to soft performance at the unregulated Entergy Wholesale Commodities business. Entergy Wholesale Commodities' strategy has been to reduce risk and loosen financial resources for other opportunities. RISEC has proved to be a very good investment for the company, and its sale is in sync with that strategy.
According to Carlyle Power Partners, with more ageing generation units retiring in New England, there is much demand for efficient gas-fired generators like RISEC to fulfill the everyday electricity requirement. With the latest acquisition, Carlyle's power generation portfolio will have a total of 18 power plants totaling over 4,900 MW.
Closing of the sale is subject to approvals from the Federal Energy Regulatory Commission and other federal regulatory bodies, expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other conditions.
The Entergy Wholesale Commodities business segment includes the ownership and operation of six nuclear power plants located in the northern U.S. and sale of the electric power thereof to wholesale customers. This business also provides services to other nuclear power plant owners. Entergy Wholesale Commodities also owns interests in non-nuclear power plants selling the electric power produced by those plants to wholesale customers.
Zacks Rank
Entergy Corporation currently holds a Zacks Rank #4 (Sell). Some better-ranked stocks in the power sector are Brookfield Infrastructure Partners L.P. BIP , Consolidated Edison, Inc. ED and Edison International EIX , each sporting a Zacks Rank #1 (Strong Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
