PEG to Serve LIPA in 10-Yr Deal - Analyst Blog

PSEG Long Island LLC, a subsidiary of Public Service Enterprise Group Inc. ( PEG ) has received a 10-year contract from Long Island Power Authority ("LIPA") to manage its electric transmission and distribution system. Per the contract, the company will look after and provide safe and reliable service to 1.1 million LIPA customers.

Lockheed Martin Corporation ( LMT ) is a subcontractor of PSEG Long Island and will be engaged in providing transition management, information technology, corporate business, energy efficiency services and other services.

The 10-year contract will begin on January 1, 2014. In its two-year transition period, 2012 through 2014, PSEG and Lockheed Martin will be engaged in appointing dedicated management teams whose employees will work and prepare to transition the management of LIPA's utility services from National Grid.

Elaborately, PSEG will supervise electric transmission and distribution operations, customer services, and LIPA's 18% ownership of Nine Mile Point 2 Nuclear Station in upstate New York as well as related functions. To fulfill the conditions of the contract, the company will develop and implement a number of operational improvements to provide safe and reliable service, increase customer satisfaction and manage the operational and maintenance costs of the utility.

Public Service Enterprise Group has a robust portfolio of regulated and non-regulated utility assets that offers a steady earnings base and significant long-term growth prospects. The company remains focused on operational excellence, financial strength and disciplined investment. Going forward, the company hopes to drive growth on the back of a low-cost nuclear fleet, assumed rate relief and added generating capacities.

However, the increasing cost of coal, higher pension and financial costs, power-price volatility and challenges from the Internal Revenue Service are areas of concern. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Based in Newark, New Jersey, Public Service Enterprise Group Inc. is a diversified utility holding company. Its operations are mostly located in the Northeastern and Mid-Atlantic parts of the U.S.

LOCKHEED MARTIN ( LMT ): Free Stock Analysis Report

PUBLIC SV ENTRP ( PEG ): Free Stock Analysis Report

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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.

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